Bitcoin Soars in Anticipation of Global ‘Easing Summer’ by Central Banks

Bitcoin (BTC) witnessed its most significant single-day surge in nearly two months on Wednesday, driven by weak U.S. economic data that heightened expectations of the Federal Reserve (Fed) and other developed nations cutting interest rates over the summer months. According to TradingView and CoinDesk, Bitcoin’s price jumped more than 7.5% to $66,250, marking its largest increase since March 20th.

Bitcoin, like other risk assets, is highly sensitive to anticipated shifts in the monetary policy stances of major central banks, rebounding when the cost of borrowing fiat currencies is expected to decrease.

The U.S. Department of Labor’s latest data revealed that April’s Consumer Price Index (CPI) rose less than expected, indicating a downward trend in the cost of living in the world’s largest economy. Following a 0.4% increase in March and February, the overall CPI increased by 0.3% last month, with the core CPI, excluding food and energy prices, also rising by 0.3% in April after a 0.4% rise in March.

Following this data release, expectations for the Fed to cut interest rates shifted significantly. Fed funds futures now show traders anticipating a 25 basis point rate cut by the Fed in September. The Fed has also indicated it will start slowing the pace of quantitative tightening in June, another method of tightening liquidity.

It’s not just the Fed adjusting its approach. Markets expect rate cuts from the Bank of England (BOE) and the European Central Bank (ECB) in June, while the Swiss National Bank (SNB) and the Swedish central bank have already lowered their benchmark borrowing costs.

This global pivot back to more accommodative monetary or liquidity policies is seen as a positive signal for risk assets, including cryptocurrencies.