Bitcoin price tops $114K amid growing bets on Fed interest rate cuts
Bitcoin (BTC-USD) pushed back above $114,000 (£84,350) on Thursday morning, buoyed by cooler-than-expected US inflation data and an increase in institutional inflows into spot exchange-traded funds (ETFs).
The cryptocurrency spiked after Wednesday's US Producer Price Index (PPI) showed wholesale inflation cooling in August, with prices falling 0.1% month-on-month and slowing to 2.6% year-on-year. The cooler-than-expected PPI cleared a path for risk assets, driving bitcoin decisively through the $113,000 level.
Bitcoin was trading at $114,100 at the time of writing, up more than 2% on Thursday, according to CoinGecko data.
The broader cryptocurrency market also gained, with total market capitalisation rising 1.5% to $4.06tn.
Read more: Crypto live prices
Ethereum (ETH-USD) followed bitcoin higher, changing hands for above $4,440 in early deals, supported by both ETF appetite and on-chain accumulation.
“PPI’s downside surprise proved a clean catalyst, as bitcoin rallied to $114,000, and institutional flows accelerated,” said Timothy Misir, head of research at BRN. “The market now sits on a clear split: if CPI prints softer than consensus, expect momentum to extend and volatility to compress as positions firm; if CPI surprises to the upside, rapid derisking is likely.”
Flows into spot bitcoin ETFs underscored the shift in sentiment. Bitcoin funds attracted $757m in net inflows on 10September, marking a third straight day of gains, according to BRN data.
Ethereum (ETH-USD) ETFs also saw $172m of inflows, while blockchain infrastructure firm Bitmine (BMNR) added 46,255 ETH, worth around $201m, to its holdings, taking its stash to more than 2.1 million ETH ($9.24bn).
The crypto derivatives market is showing that traders are willing to take on more risk. The total value of outstanding bitcoin futures contracts, known as open interest, climbed to $84.86bn, while forced sell-offs, or liquidations, dropped to $37.96m, mostly hitting those who had bet against the rally. Overall trading in bitcoin futures also rose to about $53bn, reflecting heavy activity from both regular investors and those using leverage to amplify their positions.
Traders are now looking to US Consumer Price Index (CPI) data due on Thursday for the next test of momentum. A second soft inflation print could reinforce bets that the Federal Reserve will enact three rate cuts between now and the end of the year.
However, a hotter reading risks flipping bitcoin ETF flows to the negative, and putting pressure back on risk assets.
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