Bitcoin Price Stays Flat Amid Optimism for Interest Rate Cuts

Bitcoin’s price remained nearly flat on Monday as a weekend rebound lost momentum, despite growing optimism over potential interest rate cuts keeping the cryptocurrency near a one-month high.

Broader crypto prices also saw a retreat after notable gains since Friday, following remarks from Federal Reserve Chair Jerome Powell indicating that the bank is preparing to reduce interest rates. Additionally, the weakening dollar, which has fallen to a 13-month low, contributed positively to crypto prices.

Bitcoin slipped 0.5% to $63,737.00 by 09:08 ET (13:08 GMT).

However, further gains in Bitcoin were hindered by persistent strength in the Japanese yen. The yen’s recent sharp appreciation rattled risk-driven markets and reversed carry trades favoring speculative assets like cryptocurrencies.

Bitcoin Buoyed by Rate Cut Bets

The world’s leading cryptocurrency saw a significant rise over the past two days following Powell’s comments, which hinted that interest rate cuts might be imminent.

Markets are currently positioning for a rate cut in September, though there is division over whether it will be a 25 or 50 basis point reduction, according to CME Fedwatch.

Data from the PCE price index— the Fed’s preferred inflation measure— is set to be released this Friday and may influence the direction of future rate cuts.

Lower interest rates typically favor speculative assets like cryptocurrencies, as they increase liquidity available for investment in the sector.

RFK Backs Trump, Pro-Crypto Regulatory Outlook Improves

Independent presidential candidate Robert F. Kennedy Jr., a pro-crypto supporter, suspended his campaign to back Republican nominee Donald Trump, who also favors a pro-crypto stance.

This endorsement triggered gains in crypto markets amid speculation that Trump might defeat Democratic nominee Kamala Harris, potentially leading to friendlier regulations for cryptocurrencies.

Trump’s campaigns have generally showcased a pro-crypto approach, and he recently appeared as a keynote speaker at a Bitcoin conference.

Crypto Price Today: Altcoins Dip After Weekend Rally

Within the broader crypto market, most altcoins faced declines as a weekend rally cooled and traders awaited more signals regarding U.S. interest rate cuts.

The world’s second-largest cryptocurrency, Ether, fell nearly 1% to $2,732.90, while SOL, XRP, and ADA remained flat to low.

MATIC dropped by 3.8%, while meme tokens like DOGE saw a decline of 1.7%.

Demand for Crypto Has ‘Dried Up in Recent Weeks’

According to analysts at Citi, crypto demand has notably “dried up in recent weeks.”

Both spot Bitcoin (BTC) and Ethereum (ETH) ETFs experienced net outflows in the past month, coinciding with diminished search interest and lower network activity.

Weaker demand is also reflected in futures funding rates, which briefly dipped into negative territory in August.

Analysts noted that ETF flows might continue to struggle until there’s clearer insight into whether the U.S. economy faces a soft-landing or hard-landing scenario. They added that if confidence in a soft landing increases, they expect to see a rebound in flows.

As of August 22, spot Bitcoin ETFs noted net inflows of $17.3 billion, which represent nearly 40% of the variations in weekly Bitcoin price movements since their launch in January. By contrast, ETH ETFs, launched in July, saw net outflows of $460 million, per Citi’s analysis.

Ambar Warrick contributed to this report.