Bitcoin could experience an increase in inflows this week following a significant monetary policy decision in the European Union.
The European Central Bank (ECB) is anticipated to reduce interest rates by 0.25% to 4.25% on June 6. This rate cut has the potential to enhance investor interest in risk assets like Bitcoin (BTC), as stated by Jag Kooner, the head of derivatives at Bitfinex. Kooner explained to Cointelegraph:
The expectations for the rate cut come at a time of decreasing inflation in Europe. The Consumer Price Index (CPI) for May is projected to be at 2.6%, possibly marking the eighth consecutive month of inflation below the 3% threshold.
James Wo, the founder and CEO of Digital Financial Group, also believes that the potential interest rate cut could have a positive impact on traditional equity markets and provide Bitcoin with more upward momentum. Wo mentioned to Cointelegraph:
In May, two of Europe’s main stock indexes, the STOXX 600 and DAX 40, experienced increases along with Bitcoin’s price. The STOXX 600 rose by over 3.3%, while the DAX 40 rose by over 3.8% in the last 30 days, as BTC’s price surged by over 17.4%, according to BitStamp.
Bitcoin has had a varied historical correlation with traditional equity markets. Nevertheless, in an environment driven by economic stimulus, Bitcoin could potentially rise alongside equities markets. Kooner shared with Cointelegraph:
Despite the sluggish performance of the world’s largest economy, the United States, Bitcoin’s price has shown strong growth this year. While the S&P 500 index has increased by over 11.5% year-to-date (YTD), Bitcoin’s price has surged by 57.6% YTD, according to BitStamp.
“Even though US equities have retraced, Bitcoin has remained resilient. It is yet to be determined if this is crypto lagging behind or showing relative strength,” Kooner added.
Caitlyn Jenner meme coin ‘mastermind’s’ celebrity price list leaked.