Bitcoin (BTC) Surges as Weak U.S. Economic Data Raises Rate Cut Expectations

Bitcoin (BTC) surged over 7.5% on Wednesday, marking its biggest single-day gain in nearly two months. The leading cryptocurrency by market value reached $66,250 as weak U.S. economic data raised expectations of rate cuts by the Federal Reserve (Fed) and other major central banks.

The U.S. Labor Department released data showing that the consumer price index (CPI) increased less than expected in April, indicating a downward trend in the cost of living. Additionally, retail sales growth stalled in April, further fueling rate-cut expectations.

Traders now anticipate the Fed to deliver a 25 basis point rate cut in September, with the Bank of England (BOE) and the European Central Bank (ECB) also expected to cut rates in June. Central banks worldwide are shifting towards monetary easing, which bodes well for risk assets like cryptocurrencies.

According to data tracking website MacroMicro, the percentage of central banks cutting rates is on the rise, signaling increased market liquidity. This liquidity easing over the summer months is expected to support equities and boost investor confidence.

Overall, the positive outlook for liquidity easing and rate cuts by major central banks is driving the surge in Bitcoin and other risk assets, providing investors with the confidence to take on more risk in the market.