WASHINGTON (dpa-AFX) - Strong rate cut expectations from the Federal Reserve drove cryptocurrency prices higher early on Thursday. Despite the uptick anticipated in consumer price inflation in the U.S., mood remained positive in the backdrop of the unexpected decline in producer price inflation in the U.S. The massive inflows to Bitcoin and Ether spot ETF products in the U.S. on Wednesday also contributed to the surge in prices. The broad-based rally is in spite of the Dollar's resurgence, the spike in bond yields as well as a widely expected interest rate status quo by the European Central Bank.
With just 6 days to go for the Fed decision, rate cut expectations from the Fed have become more entrenched. The CME FedWatch tool that tracks the expectations of interest rate traders shows the likelihood of a quarter percentage rate cut at 92 percent and a 50-basis points rate cut at 8 percent. Crypto prices are trading firm as a fall in interest rates reduces the opportunity cost of holding cryptocurrencies that are a non-interest-bearing product.
Rate cut expectations have been boosted by the unexpected decline in producer price inflation in the U.S. Data released on Wednesday morning by the U.S. Bureau of Labor statistics had showed headline monthly producer price inflation unexpectedly declining to -0.1 percent in August from a downwardly revised 0.7 percent in the previous month. Markets had anticipated a level of 0.3 percent. The monthly core inflation, the headline annual inflation as well as the core annual inflation, all came in much lower than expected.
The increase in crypto prices is despite the perceived uptick in consumer price inflation in the U.S. Headline annual inflation is seen rising to 2.9 percent from 2.7 percent in July whereas the core component is seen steady at 3.1 percent. Month-on month inflation is seen edging up to 0.3 percent from 0.2 percent in the previous month whereas its core component is seen steady at 0.3 percent.
The massive inflows to crypto ETF products in the U.S. also supported sentiment. Bitcoin-based Spot ETF products in the U.S. witnessed inflows of $742 million on Wednesday versus inflows of $23 million on Tuesday. Fidelity Wise Origin Bitcoin Fund (FBTC) topped with inflows of $299 million. Ethereum-based Spot ETF products recorded net inflows of $172 million on Wednesday versus net inflows of $44 million a day earlier. iShares Ethereum Trust ETF (ETHA) topped with inflows of $75 million.
Around 64 of the top 100 cryptocurrencies are trading with overnight gains of more than a percent. On the contrary, only 9 are trading with overnight losses of more than a percent. Overall crypto market capitalization has gained 1.5 percent overnight to $3.96 trillion.
Bitcoin is currently trading at $113,952.76 recording overnight gains of 1.49 percent. BTC had ranged between $114,472 and $112,181 in the past 24 hours. The cryptocurrency is currently trading about 8 percent below the all-time-high of $124,457.12 recorded on August 14.
Ethereum surged 2.4 percent overnight to trade at $4,425.94. Ether's current trading price is 11 percent below its all-time-high. The 24-hour trading range was between $4,450 and $4,301.
3rd ranked XRP added 1.9 percent overnight to trade at $3.02, around 21 percent below the all-time high.
5th ranked BNB gained 2.1 percent overnight at its current trading price of $900.64. BNB had touched an all-time high of $906.12 earlier in the trade.
The price of 6th ranked Solana also surged 2.3 percent overnight to $224.84.
8th ranked Dogecoin also leaped 3.9 percent overnight and is currently changing hands at $0.2502.
TRON ranked 9th overall added 1.9 percent overnight and is currently changing hands at $0.3453.
10th ranked Cardano rallied 1.1 percent overnight to trade at $0.8849.
28th ranked Mantle (MNT) topped overnight gains among the top 100 cryptocurrencies with a gain of more than 12 percent. 53rd ranked Pump.fun (PUMP) followed with overnight gains of more than 11 percent.
34th ranked Worldcoin (WLD) topped overnight losses among the top 100 cryptocurrencies with a decline of 6.2 percent. 82nd ranked Pyth Network (PYTH) and 30th ranked World Liberty Financial (WLFI) followed with losses of more than 4 percent.
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