Key points:
- Bitcoin jumps on Powell’s rate-cut message.
- Prices peak at three-week high of $65,000.
- Rates impact BTC’s liquidity and adoption.
OG coin is increasingly sensitive to interest rates now that it’s available for every investor to pull into their portfolio.
- Bitcoin
BTCUSD surged roughly 8% Friday and briefly topped $65,000 per coin. Behind the rally was a specific macroeconomic event. These have been getting increasingly enmeshed in the crypto space as digital assets have been moving closer to mainstream finance and traditional investments. The latest news on interest rates showed the growing influence macro drivers have on the novel crypto asset class. - Jay Powell, Chair of the Federal Reserve, said at the annual Jackson Hole gathering of central bankers that interest rates are primed for a cut. Changes in borrowing costs affect the capital flows in the crypto space, which is full of higher-risk assets. Market participants are more likely to grab a loan that’s cheaper to pay off than pile debts that carry a higher interest rate, which will be more costly to repay.
- By the looks of it, broader adoption and continuous liquidity for the crypto market hinge on the scale of correlation it has to traditional assets. The more Wall Street and regular traders warm up to it through spot Bitcoin ETFs and other entries to the space, the better its chances for price appreciation and consistent growth. And if that is the case, then it’s only natural for crypto to be impacted by economic news, such as interest rate decisions, inflation and other macro data.
