- The Bank of England declared a 0.25% reduction in interest rates, bringing them to 5%. One of the longest stretches of higher interest rates has come to an end with this.
The Bank of England announced the interest rate reduction in an August 1st X post. The main cause of the easing was inflation, which over the previous year drastically decreased from 8% to 2%.
The bank hasn’t lowered interest rates in more than four years; the last recent drop was made in March 2020.
The unexpected rate reduction may have helped the price of Bitcoin because experts couldn’t agree on whether the bank would lower or maintain rates.
Although a further easing below 5% may be possible later in the year, maybe in November, the governor of the Bank of England wants to avoid making too many or too quick cuts.
Notably, during the coming months, it is anticipated that inflation would gradually return to its target of 2%.
In the past, easing monetary policy has increased risk associated with assets like gold and bitcoin, but the price of bitcoin is still range-bound.
The Real Kicker is US Monetary Policy
The price of Bitcoin is still below $65,000 even after the UK announced its first rate drop in more than four years.
The United States Federal Reserve’s August decision to maintain its benchmark lending rates could be the cause of the slow price movement.
However, if US interest rates are lowered in September, the price of bitcoin might experience a substantial increase in liquidity.
Traders have an 86.5% chance, based on CME’s FedWatch tool, that the central bank would cut its rate from the current 5.25% – 5.50% to 5.00% – 5.25% in September.
This comes after remarks made by Federal Reserve Chair Jerome Powell on Wednesday, which suggested that a rate cut would occur as soon as September.
Powell emphasized that before thinking about easing borrowing restrictions once more, they need solid economic indicators. As anticipated, the central bank held its benchmark interest rate at 5.25%–5.50% in August.
Powell’s remarks and the Fed’s position, however, suggest that a rate reduction in September is not certain. Rather, the only thing that needs to be seen is more accurate statistics regarding the job market and inflation.
According to the most recent ADP data, employment growth slowed down in July, with only 122,000 new positions added, below the 150,000 predicted.
The yearly salary also rose by 4.8%. The gloomy figures and a notable decline in the yield on 10-year US bonds, which indicates a diminished belief in the prospects for economic expansion, bolster anticipations of a rate reduction.
Bitcoin Is Being Scooped Up by Crypto Whales
Even though additional cuts are still somewhat unknown, recent Bitcoin whale accumulating shows assurance.
Big Bitcoin holders—accounts that possess at least 0.1% of the cryptocurrency in circulation—amassed more than 84,000 Bitcoin in July, making their total worth more than $5.4 billion.
When Bitcoin hit its 11-month low in October 2014, the increase was the largest since then.
Similarly, during the early July price collapse below $55,000 and the few pauses throughout the recovery to $69,000, bargain hunters drove last month’s accumulation.
The deliberate build-up indicates a strong conviction that the protracted consolidation phase between $50,000 and $70,000 will ultimately culminate in a bullish breakout.
This highlights high-potential investment opportunities and creates an interesting precedent for price behavior in the upcoming months.
Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
