Affected by the US PPI data and the Federal Reserve's 50 basis point interest rate cut, the price of Bitcoin reached $60,000 today. Institutional BTC purchases also boosted momentum.

The price of bitcoin (BTC) briefly recovered the $60,000 mark today, reflecting the return of bullish sentiment in the cryptocurrency market. Several macroeconomic and market-specific factors have contributed to this surge, bringing a glimmer of optimism to investors. In addition, there has been an increased bet on a 50 basis point rate cut by the Federal Reserve.

The price of bitcoin has risen to $0.06 million.

One of the key driving factors behind the surge in bitcoin prices is the latest US economic data, especially the Producer Price Index (PPI) data. The PPI, which measures the cost producers incur for goods and services intended for final demand, showed a 0.3% increase in August, slightly higher than the widely expected 0.2%.

Excluding food and energy, the core PPI also rose by 0.3%, indicating persistent inflationary pressure in the economy. On a year-on-year basis, overall PPI increased by 1.7%. The core PPI, excluding food, energy, and trade, saw an annual increase of 3.3%.

Probability of a rate cut by the Federal Reserve

Chris Larkin, the director of electronic trading and investment at asset management company Morgan Stanley, emphasized the consistency between the PPI and CPI. He also believes that the recent unemployment claims data has cleared the way for the Fed to start its rate-cutting cycle.

The market has already anticipated a 0.50% interest rate cut, and the Bitcoin price is expected to rise as a result. Now, attention is turning to how the Federal Reserve will significantly lower interest rates. Powell emphasized that the discussion will soon focus on the speed and depth of the rate cut, which could play an important role in shaping market trends.

In addition, Citigroup analysts predict that the Federal Reserve will cut interest rates by 1.25% in 2024. They expect this move to align with a cooling inflation (especially core personal consumption expenditures) and improving labor market conditions. If inflation continues to slow and borrowing costs decline, this could drive economic recovery and provide a favorable backdrop for risk assets such as Bitcoin.

BTC and other cryptocurrencies often benefit from a low interest rate environment. With cooling inflation and lower borrowing costs, investors often turn to assets like Bitcoin to hedge against inflation and take advantage of potential higher returns. Additionally, analyst Ali Martinez's predictions for Bitcoin price suggest that BTC will reach $64,300 as it surpasses the $59,885 level.

Institutional BTC purchases are soaring.

In addition to macroeconomic factors, institutional interest in Bitcoin is also surging. MicroStrategy, led by CEO Michael Saylor, revealed on the X platform that the company has expanded its Bitcoin holdings by purchasing an additional 18,300 BTC, worth 1.11 billion USD.

This solidifies MicroStrategy's position as the largest corporate holder of Bitcoin. Similarly, Marathon Digital Holdings, a well-known player in the Bitcoin mining industry, has increased its holdings by more than 5,000 BTC in the past month. This brings their total holdings to 26,200 BTC, worth approximately 1.5 billion USD.

Furthermore, there has been a rebound in the inflow of spot Bitcoin ETFs in the cryptocurrency market. So far this week, the inflow of these ETFs stands at 0.1407 billion USD, recovering from the outflow of the previous week. This positive sentiment is expected to push up the price of Bitcoin. Additionally, Ric Edelman, the founder of the Digital Assets Council, has set a target price for BTC at 0.42 million USD.