Bitcoin price rose early on the weekend following a speech by Federal Reserve Chairman Jerome Powell at a symposium in Jackson Hole. According to the latest on-chain observations, the announcement of potential interest rate cuts has led to an augment in demand for Bitcoin over the past day.
BTC Demand Grows in the US. Impact on Price?
In a recent post about the X platform, Julio Moreno, Head of Research at CryptoQuant revealed that demand for Bitcoin has surged in the United States over the past 24 hours. The surge comes after the Fed revealed that a cycle of lower interest rates will soon begin.
Lower central bank interest rates are often a welcome development for risk assets like Bitcoin, the world’s largest cryptocurrency. Falling interest rates tend to reduce the returns on established financial instruments like bonds, making cryptocurrencies a more attractive option for investors seeking higher yields.
According to Moreno, the BTC price premium on Coinbase — the largest U.S. cryptocurrency exchange — has surged to its highest level since mid-July. For context, the Coinbase premium refers to the difference between the coin’s value on Coinbase and other global centralized exchanges.
Chart showing BTC's Coinbase premium index | Source: jjcmoreno/X
Typically, when the BTC price premium on Coinbase increases, it means that demand from American investors is increasing as they are willing to spend more to acquire Bitcoin. As explained earlier, this increased demand makes sense given the likelihood of interest rate cuts and lower yielding established financial instruments.
Rising demand is a particularly good sign for the Bitcoin price, as it suggests that investors are positioning themselves to capitalize on the promising future of cryptocurrencies. At the same time, rising demand and a growing price premium could result in increased market volatility.
What’s more, the growing demand for US Bitcoin comes just in time, as demand growth has remained subdued over the past few weeks. CryptoQuant noticed the report stated that demand for BTC has been delicate since April 2024, when the coin was priced at around $70,000.
According to the blockchain intelligence firm, apparent demand needs to augment for BTC price to see the lithe of day. Ultimately, if the growing demand in the United States continues and spreads to other markets, investors could see the flagship cryptocurrency return to near all-time highs.
Bitcoin price in brief
At the time of writing, BTC is trading at around $64,000, up over 5% in the past day. According to data from CoinGecko, the major cryptocurrency is up 7.5% in the past week.
The price of BTC on the daily timeframe | Source: BTCUSDT chart on TradingView
Featured image from iStock, chart from TradingView
