Interest in Bitcoin among U.S. buyers hit a 39-day high following the Federal Reserve’s indication that interest rates could soon be lowered.
According to CryptoQuant analyst Julio Moreno, this increased demand was evident in the Coinbase Premium Index, which measures the price gap between Bitcoin on Coinbase Pro and Binance. The index reached 0.0114 on August 24, its highest level since July 15. Moreno posted on X, “Bitcoin demand in the US spiked today as the Fed signaled the cycle of lower interest rates will begin.”
#Bitcoin demand in the US spiked today as the Fed signaled the cycle of lower interest rates will begin.
Price premium on Coinbase is the highest since July (green line). pic.twitter.com/X4RREm3Uxb
— Julio Moreno (@jjcmoreno) August 23, 2024
The Coinbase Premium Index gauges U.S. investor demand relative to the rest of the world. Positive readings, like the recent one, suggest heightened buying activity, while negative readings can indicate selling pressure. Just before Bitcoin’s sharp decline on “Crypto Black Monday” on August 5, when prices dropped below $50,000, the index had fallen below -0.10.
The recent surge in demand was followed by comments from Federal Reserve Chair Jerome Powell at the annual Jackson Hole symposium. While he didn’t provide a specific timeline for rate cuts, Powell mentioned, “The time has come for policy to adjust,” which many interpreted as a signal that interest rate reductions are imminent.
Bitcoin’s price has risen 5.46% since August 22, reaching $63,978 at publication. The price briefly touched $64,769 on August 24, its highest point since August 2. Powell’s comments fueled this increase, prompting a flurry of buying activity.
Before the Federal Reserve’s announcement, BTC had hovered around $60,000. Market watchers were concerned about potential selling pressure from miners due to the elevated cost of mining, which remains at $72,224. However, the anticipated interest rate cuts shifted focus, driving prices upward despite those concerns.
Crypto analyst Will Clemente revealed the continued market perception of BTC as a valuable asset even during periods of lower prices. “There’s still 7 days left in the month, but there’s no denying that the market has seen sub-$60k BTC as value for 6 months now,” Clemente noted in an August 23 post.
Recent developments demonstrate how macroeconomic factors influence Bitcoin’s price movements. The Coinbase Premium Index serves as a key indicator of investor behavior in the U.S. market.
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