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Bitcoin Surges Amid Economic Data Expectations and Interest Rate Speculations
Discover how Bitcoin is experiencing a surge as investors react to upcoming economic data and speculations surrounding interest rates. Explore the implications for the cryptocurrency market and what this means for future investments.
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This article originally appeared in First Mover, CoinDesk’s daily newsletter, providing insights into the latest movements in crypto markets. Subscribe to stay updated with daily market analysis.
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- CoinDesk 20 Index: 1,857.87 (+0.73%)
- Bitcoin (BTC): $59,022 (+0.84%)
- Ether (ETH): $2,506 (−0.53%)
- S&P 500: 5,648.40 (+1%)
- Gold: $2,495.38 (−0.07%)
- Nikkei 225: 38,686.31 (−0.04%)
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Bitcoin has recently surged above the $59,000 mark, although this rally has been somewhat tempered by indications of potential interest rate hikes in Japan. Currently, BTC is showing a 1% increase over the last 24 hours, while the broader crypto market has experienced a rise of approximately 0.9%, as reflected in the CoinDesk 20 Index.
A significant wave of U.S. economic data is anticipated this week, starting with the Institute of Supply Management’s manufacturing purchasing managers’ index for August, which is scheduled for release on Tuesday. A disappointing report could reinforce expectations for the Federal Reserve to reduce interest rates, likely enhancing the appeal of riskier assets like cryptocurrencies.
Bank of Japan Governor Kazuo Ueda has reiterated that the central bank is prepared to implement further interest rate increases if the economy and inflation trends unfold as anticipated. Ueda pointed out that the current economic landscape remains supportive, with inflation-adjusted interest rates still negative, even following a benchmark borrowing cost increase in late July—the first of its kind in decades. This move has led to an unwinding of yen carry trades, which has destabilized various risk assets.
As a consequence of Ueda’s remarks, there has been a strengthening of the yen, pushing the USD/JPY exchange rate down to 145.85 from 147. Additionally, futures linked to the S&P 500 declined by 0.5%, with Bitcoin also seeing a drop of 0.4%, settling at approximately $58,920, according to CoinDesk data. The Bank of Japan’s strategy of tightening monetary policy poses challenges for risk assets, especially considering that the U.S. Federal Reserve is likely to initiate rate cuts in September.
In other news, Japanese investment advisory firm Metaplanet, which embraced Bitcoin as a reserve asset earlier this year, has partnered with SBI VC Trade to offer custody services for its holdings. SBI VC Trade, a subsidiary of Tokyo-based SBI Holdings, provides the option to utilize Bitcoin as collateral for financing, as announced by Metaplanet on Monday. In May, Metaplanet disclosed its decision to adopt Bitcoin as a reserve asset to mitigate the volatility associated with the yen. As of August 20, the firm holds 360.4 BTC, valued at around $21 million. This reserve-asset strategy is reminiscent of software developer MicroStrategy, which has been accumulating Bitcoin since 2020 and now possesses over 226,000 BTC, accounting for more than 1% of the total Bitcoin supply that will ever exist.
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