Bitcoin Strengthens Amid US GDP Contraction and Price Slowdown... "Expectations for Accommodative Fed Grow"
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The decrease in US Gross Domestic Product (GDP) and slowdown in inflation are fueling expectations of monetary easing by the Fed, driving Bitcoin's strength. Market analysts point out that Bitcoin is increasingly being re-evaluated as an interest-rate sensitive asset.
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According to TheBlock on the 2nd (local time), as the US Q1 GDP contracted for the first time in three years and the core Personal Consumption Expenditures (PCE) price index remained at the same level as the previous month, alleviating inflation concerns, Bitcoin (BTC) prices are rising again. The annual PCE increase rate on the same day dropped from 3.0% to 2.6%, gradually approaching the Federal Reserve's 2% target.
Valentin Fournier, lead analyst at BRN Research, stated, "Expectations for interest rate cuts are strengthening again, which could be more favorable for alternative risk assets like cryptocurrencies compared to stocks." He analyzed that "Bitcoin is likely to benefit if liquidity supply resumes." In fact, Bitcoin has risen over 13% since 'Liberation Day', reaching a two-month high, while the S&P500 has risen less than 1% in the past 30 days.
On May 1st, $442 million flowed into spot Bitcoin ETFs, offsetting the previous day's $56 million net outflow, with Ethereum ETFs showing a similar but smaller trend. Fournier analyzed that "while asset reallocation was the main cause in the past, currently price momentum itself is driving demand."
Mike Cahill, CEO of Douro Labs, said, "If employment indicators are weaker than expected, the justification for rate cuts could strengthen and fuel Bitcoin's price rise." Private employment this week decreased to 62,000, and the non-farm employment report, unemployment rate, and wage growth rate to be announced on the 3rd are drawing attention.
Cahill emphasized that Bitcoin, previously considered a 'risk asset', now functions as an 'interest-rate sensitive global asset'. He noted that "institutions are beginning to view Bitcoin as a macroeconomic tool" and are watching the impact of this rate meeting.
Meanwhile, the US Federal Reserve is scheduled to hold a Federal Open Market Committee (FOMC) meeting over two days from the 6th to 7th to determine interest rate policy. According to the CME FedWatch Tool, there is a 93% chance that the benchmark rate will remain unchanged at this meeting.
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