Yahya 
Interestingly, Bitcoin (BTC) is moving upward over 7% while most assets are taking a change. The cryptocurrency market was highly volatile on Wednesday with its price increased by 5% to reach the highest level since March 19. This decision was triggered by the weaker than expected US data published last week, which emboldened the Fed to cut its rate in September. Bitcoin’s activity this month also highlights how much volatility risk assets could experience given the economic uncertainty and prospect of rate hikes.
Economic Data Strengthens Case for Fed Cut
The Labor Department of America provided the data on the consumer price index (CPI) that grew at a rate of 0. 3% drop in just one month of February and, less than 3% in April, overshooting forecasts. The community has witnessed a decline after an initial rise of the new people. The CPI (Consumer Price Index) posted a 0.4% increase in both March and February matching the slowdown in inflation.
On the market data side, retail sales for the month of April were not any average; the crucial ‘control group’ category which is used for GDP calculations went down by 0.3%. undefined The prognosticators bear the responsibility for these indicators’ shifting investor expectations in a pretty major way, with the fed funds futures market now signaling more than 80 percent probability of an upcoming 25 basis point rate cut.
Global Trend of Rate Cuts
The fact is that the Federal Reserve was not the only economic body to shift to dovish stance. The market expects the Bank of England (BOE) and European Central Bank (ECB) to do so a month later, after the Swiss National Bank (SNB) and Riksbanken in Sweden did the same. The information from Macro Micro povs that there is a growing graph of the net percentage of central banks cutting rates.
‘MacroMicro explained, the higher the quotient’s values get, the more central banks reduce the rate at which interest is charged, which helps to ease the condition of market liquidity. On the contrary, as the quotient declines, the market becomes financially tight.’
Positive Outlook for Risk Assets
The liquidity easing switch is , and that is a good development for cryptocurrencies, risk assests. Investors feeling bullish about BTC, which resulted in a rally of the cryptocurrency reaching $66,250 in just one week ago, is displaying optimism for future price movements. Given the fact that many central banks are taking steps to loosen monetary policy, the overall costs of borrowing fiat money is forecasted to become lower and thus an environment with higher risk appetite.
Investors are therefore advised to maintain exposure to equities and other risky assets since the likelihood of this trend persisting through the summer months is high. Pepperstone broking firm believed equity market participants “to settle for a more riskier place since the good news for liquidity easing may go on.”
Generally speaking, the increasing number of central banks with tighter monetary policies denotes a prospect of favorable developments in risk assets. Bitcoin’s recent climb is a proof of this approach in action by the markets’ adjustments under the assumption of the forthcoming monetary easing. As time goes along, this type of setting is probably going to sustain pro-risk assets, which will help reinforce the investor confidence and liquidity of the market.