ECB Cuts Rates, Crypto Markets Brace for Potential Bitcoin Rise

Crypto news journalist Colin Wu notes that the European Central Bank (ECB) has announced its first interest rate cut in five years, reducing rates by 25 basis points.

This decision comes in the context of inflation projections at 2.5% in 2024, which will gradually decline to 1.9% by 2026. Furthermore, GDP growth forecasts predict a GDP increase of 0.9% in 2024 and 1.6% in 2026. The move, anticipated by money markets, marks the first cut since September 2019, when deposits at the central bank entered negative territory.

The unanimous decision to cut rates was taken by all 20 national representatives ECB President Christine Lagarde highlights the data-driven nature of their approach. She emphasizes that decisions will be made meeting after meeting.

Lagarde revealed that despite unanimous agreement on the data-driven pathway, one member abstained from the vote. However, she did not reveal their identity. The Governing Council reiterated its commitment to analyzing the inflation outlook, underlying inflation and monetary policy transmission.

Bitcoin could capitalize on the possibility of further rate cuts

Following the announcement, market expectations revolve around potential further rate cuts. In particular, economists expect two more cuts in the near future. This decision is in line with a broader global trend, such as that of the Bank of Canada recently became the first major central bank to cut interest rates this year, sparking speculation about a similar move by the ECB.

In addition to these macroeconomic conditions in the European Union, analysts at QCP Capital to suggest that today’s US jobless claims report and the upcoming release of the consumer price index could potentially drive Bitcoin to new all-time highs.

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QCP Capital also says that market momentum could intensify if potential rate cuts are factored into the equation. The sentiment echoes recent actions by central banks around the world, underscoring a collective effort to overcome economic uncertainties. This becomes notable as the ECB is expected to follow suit with a similar quarter-point rate cut.

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