The Bank of England came out with a trim of interest rates by 0.25 percent points, setting the rate at 5%. This action actually ended an extended but prolonged finance flood.
It was on August 1st that the Bank of England made it known on X of the fact that the decision to have the rates lowered can be at blame for never experienced before being in the data being a 8% to 2% record in the last 2 years. The ongoing reduction in interest rate has from this time since 2020 when the bank implemented it initially.
Economists are having mixed opinions on the effect of the haircut on Bitcoin, some of them think it will bring a positive reaction as the monetary policy will be providing lax in the market.
Potential for Further Rate Cuts
There is a chance of bringing the interest rates below the 5% level, probably in November, it is so however only if the Bank of England’s CEO decides to proceed with great care so as not to let the life of borrowing become “too quickly or too much”.
The fact that inflation is set to surpass the target of 2% in the coming months is remarkable. In the past, monetary policy easing has been good for risk-on assets like Bitcoin and Gold. However, bitcoin’s price is persistently inside a set range.
US Monetary Policy: The Real Influencer
Despite the cut in the rates by the Bank of England, the value of Bitcoin is still suppressed under $65,000. This slow, heavy price action is a result of the Federal Reserve of the United States deciding to keep their key rates unchanged in August.
Nevertheless, there could be additional liquidity by entering of the US stock market and upward BTC prices due to a rate cut (if the US Federal Reserve lowers rates in September). According to CME’s FedWatch project, it is likely that the trade will rate the chance of rate cuts at 86.5% which will bring it to 5.00%-5.25% in the following month while the range will be 5.25%-5.50% during February.
The head of the Federal Reserve has just suggested that a reduction of rates may be on the horizon, ensuring that such a measure will only be implemented if the economic data is strong. Powell stressed the fact that it is essential to presenting him with a substantial amount of reliable data before making his decision to let the interest rate fall again.
Economic Data and Market Sentiment
The most recent ADP Employment Report showed a decrease in the growth of jobs with only 122,000 new employment opportunities being created in July, which was less than the 150,000 jobs that were anticipated to materialize. Furthermore, there is evidence that wages have gone up by 4.8%. Rising from 1.1% a day before, this along with the big drop in the 10-year U.S. bond yields is confirming hopes for a cut in the rate that will soon happen.
Both the assertions made by Powell and the reserved stance that the Fed is taking give us a clue that September may not be the date for all interest rates to be cut but rather an expected boost in the views on inflation and job market.
Crypto Whales Accumulate Bitcoin
With the tension that surrounds spending direction’s future and additional rate cuts, the recent Bitcoin whale accumulation, in fact, signifies their increased confidence. In fact, the people owning the largest number of Bitcoins, those in the range of the whole circulating supply to 0.1% of the total, accumulated over 84,000 BTC in July, which cumulatively has cost over $5.4 billion.
Moreover, this is the most notable accumulation in the past seven years, driven mostly by bargain-hunters who bought at a low price under $55,000 in the first days of July and waited for the recovery to $69,000. The decision to buy more BTC, in such a strategic manner, indicates a strong conviction that the so long consolidation period over the past year will now give way to a new bullish breakout in the range of $50,000-$70,000.
Investment Opportunities Ahead
The Bank of England cutting their rates and the likelihood of US interfering in the monetary realm could be a determining factor for Bitcoin’s behavior in the next few months. Big crypto investors are showing a sense of power by amassing large holding, which is likely to signal the rise of the Bitcoin market.
