US BTC Demand Spikes as Fed Signals Rate Cuts: CryptoQuant

cryptonews.com:

Tanzeel Akhtar has been covering the cryptocurrency and blockchain sector since 2015. She has written for the Wall Street Journal, Bloomberg, CoinDesk and Bitcoin Magazine.

Bitcoin price spiked by over 6% experiencing a surge last Friday following remarks from Federal Reserve Chairman Jerome Powell, signalling that a phase of lower interest rates could be on the horizon, reports CryptoQuant in its weekly report.

Bitcoin hit $65,000, its highest level since August 2. This rally coincided with a decrease in the yields of U.S. government bonds, which fell to their lowest level since March 2023, further fueling the market’s enthusiasm.

The recent price surge was largely driven by a spike in demand from U.S. investors. CryptoQuant reports this is evidenced by the Bitcoin price premium on Coinbase, a leading cryptocurrency exchange, which rose to its highest point since July.

This premium indicates that U.S. investors are willing to pay more for Bitcoin than the global average, reflecting a strong local demand.

Additionally, Bitcoin is now flowing back into Coinbase from exchanges outside the U.S., a trend historically linked with rising prices. This movement suggests that U.S. investors are increasingly dominant in the market, seeking to capitalize on the potential benefits of a more accommodative monetary policy.

Bitmex co-founder Arthur Hayes writes in a blog post that the initial positive market reaction concerning the Fed finally committing to cutting its policy rate is justified because investors believe that if money is cheaper, assets priced in fiat dollars of fixed supply should rise.

“We are forgetting that these future anticipated rate cuts by the Fed, BOE, and ECB reduce the interest rate differential between these