Bitcoin BTC
+1.27%
The world’s largest digital asset rose more than 2% in the past 24 hours, correlating with active stock markets in morning trading on Monday. Bitcoin price rose more than 2.25%. According to , it changed hands last day at 7:15 a.m. for $69,035. Block’s pricing page.
mainly European and UK stock indices were in the green on Monday. In London, the FTSE 100 rose 13.48 points to 8,288.86 in early trading. The Stoxx 600 index in Europe showed gains on the day, rising 0.44%. 520.44. Meanwhile, S&P 500 futures in New York In pre-market trading, the NYSE Composite rose 0.15%, while the NYSE Composite rose 1.3%.
The rise comes as borrowers in the euro zone are expected to receive relief from higher interest rates this week. The European Central Bank (ECB) is expected to lower interest rates on Thursday following the recent decline in inflation.
Financial markets say there is a 93% chance that the ECB will cut interest rates at this week’s monetary policy meeting. The ECB is likely to cut the deposit rate that banks use to make overnight deposits into the Eurosystem from the current high of 4% to 3.75%.
Bitcoin Could Benefit from Increased Market Liquidity
Jag Kooner, head of derivatives at Bitfinex, said in an interview with The Block that historically Bitcoin has shown a mixed correlation with stocks. “During times of economic crisis, Bitcoin often mirrors stock market trends as investors liquidate assets,” Kooner said. “In a stimulus environment with lower interest rates, Bitcoin could benefit along with stocks due to increased liquidity. “He said.
Kooner added that Bitcoin is also seen as a hedge against inflation. If inflation expectations rise due to the ECB interest rate cut, digital assets may be perceived as ‘digital gold’ and attract more investment.
“If Bitcoin continues to be treated as a risk asset and benefits from the same influx of liquidity, it could follow stocks,” Kooner said.
Impact on ECB interest rate decision may be limited
YouHodler head of markets Ruslan Lienkha told The Block that he does not believe the ECB’s decision will have a significant impact on the price of Bitcoin. “As the European cryptocurrency market is relatively small, expectations of an interest rate cut in the EU are not reflected in Bitcoin price movements,” he said.
Lienkha acknowledged that there may be some divergence in the short term, but added that Bitcoin is largely correlated with the U.S. stock market in the medium to long term.
“Therefore, interest rate cuts could stimulate growth in European stock markets, creating positive sentiment in U.S. markets and indirectly supporting cryptocurrency prices in the short term,” Ruslan said.
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