Bitcoin prices rose Wednesday on expectations of an interest rate cut by the Federal Reserve, while data indicating an improvement in capital flows into spot exchange-traded funds also contributed to sentiment.
Cryptocurrency prices across the board also rose as markets positioned in anticipation of lower U.S. interest rates, which are expected to benefit assets that are speculative on risk.
Bitcoin ETFs Post Inflows After Two Weeks of Outflows
Data this week indicated that BlackRock’s iShares Bitcoin Trust noted its first day of inflows in two weeks on Monday, breaking a streak of back-to-back outflows analyzed since mid-August.
The inflows illustrated some shift in sentiment after uncertainty regarding the U.S. presidential election, interest rates, and ultimately a possible economic recession weighed on cryptocurrency prices across the board.
Although trading volumes in Bitcoin ETFs in the U.S. were well below the highs seen earlier this year, enthusiasm for the ETF has waned, particularly among retail traders.
MicroStrategy Buys More Bitcoin, Will Issue More Debt
Software company MicroStrategy Incorporated (MSTR) acquired about $1.1 billion in Bitcoin between Aug. 6 and Sept. 12, the company reported the previous week, positioning it as the largest corporate holder of the token. The company holds about $9.5 billion in Bitcoin.
The company mentioned this week that it will raise about $700 million through a private issuance of convertible bonds due in 2028, which can be used to redeem past debt obligations and acquire more Bitcoin.
Cryptocurrency Prices Today: Altcoins Advance, Fed Rate Cut Expected
Cryptocurrency prices rose in anticipation of an interest rate cut by the Federal Reserve on Wednesday. The world’s No. 2 cryptocurrency, Ether, was down 0.4% at $2,319.94, while altcoins XRP, Solana and Cardano moved in a flat-to-low range.
Among Meme Cryptocurrencies, Dogecoin Was Up 0.25%.
The Fed is widely forecast to cut interest rates at the end of a meeting later on Wednesday. While markets were initially split between bets of a 25 or 50 basis point cut, CME FedWatch shows traders are increasingly leaning toward a larger cut in recent sessions. The rate cut frees up liquidity that can be invested in speculative risk assets such as cryptocurrencies.
Australia’s Central Bank Shifts Its Focus from Retail to Wholesale CBDC Development
Separately, Australia’s central bank plans to shift its focus from developing a retail consumer-facing central bank digital currency (CBDC) to a wholesale CBDC, Deputy Governor of the Financial System Brad Jones revealed during a fintech conference in Melbourne.
As distinguished from a retail CBDC, which the general public could use for everyday transactions such as grocery shopping, a wholesale CBDC is intended for transactions between banks and financial institutions, including cross-border payments. Jones noted that the bank sees “the benefits to the economy more promising, and the challenges less problematic, for a wholesale CBDC compared to a retail version.”
“This recognizes that, unlike a retail CBDC that would be issued for use among the public, a wholesale CBDC would represent more of an evolution than a revolution in our monetary arrangements,” he added.
Separately, the Reserve Bank of Australia is set to launch a three-year research initiative called Project Acacia, which will explore the future of digital money in the country. This project will look at the central bank’s wholesale digital assets and commercial banks’ tokenized deposits, with the aim of understanding how concepts such as “programmability” and “atomic settlement” in tokenized markets could benefit the Australian economy.
