Bitcoin rose more than 2% over the weekend, reaching $66,000 on Friday. This rise comes as positive inflation data fuels investor optimism and spot Bitcoin exchange-traded funds saw large inflows on Thursday.
Bitcoin peaked at around $66,500 just before midday on Friday before giving back gains to remain at around $66,000. The leading cryptocurrency has not reached such a high since the end of July. Ethereum also surged on Friday morning, jumping about 2% from $2,644 to $2,699 in 45 minutes.
The current crypto rally, with Bitcoin still far from its all-time high of $72,000, appears to be based on a variety of factors.
This morning, the US Bureau of Economic Analysis released the Personal Consumption Expenditure Price Index for August 2024. The index (PCE) is an important indicator of inflation in the US economy. That’s what the report showed Inflation has slowed to 2.2% compared to August last year, a sharp decline compared to 2.5% in July and the lowest since 2021.
These numbers appear to confirm the Federal Reserve’s recent decision to ease monetary policy, which was made last week, Fed Chairman Jerome Powell announced Interest rate cuts of 50 basis points, a more aggressive cut than some had expected. These lower-than-expected inflation rates may increase the attractiveness of volatile assets like Bitcoin
Inflation rates are not the only factor driving Bitcoin’s rise. Thursday saw large tributaries Spot Bitcoin ETFs totaled $365 million, the highest since July 21, according to SoSoValue data. These ETFs saw inflows across the board, with the exception of the Grayscale Bitcoin Trust bleeding investments since January.
ARK Invest’s 21Shares Bitcoin ETF led the way with net inflows of nearly $114 million, followed by BlackRock’s iShares Bitcoin Trust, which raised $93 million. Fidelity’s Wise Origin Bitcoin Fund came in third with $74 million, and the remaining 11 funds reported smaller inflows. Grayscale Bitcoin Trust saw outflows of almost $8 million. Since the Securities and Exchange Commission has approved these ETFs In January, the sector raised a total of $18 billion, with the highest daily net inflows reported back in March.
Another factor that could contribute to Bitcoin’s rise is the recent changes in China’s economic policies. This week the people Bank of ChinaThe PBOC (PBOC) said it is considering injecting up to 1 trillion yuan, or $142 billion, into its largest state-owned banks to boost the slowing economy. The PBOC also announced a 50 basis point cut in interest rates on loans to commercial banks. The price of Bitcoin has changed strong correlation with the PBOC’s balance sheet and these developments over the last thirty days, according to Coindesk.