ETFs
Will Bitcoin ETFs Soar Following an Earlier Than Expected Fed Rate Cut?
Bitcoin surpassed the $71,000 mark, indicating increased market confidence in possible interest rate cuts from the Federal Reserve. This streak of daily increases is the longest in three months, just 4% below its all-time high of $73,798 set in mid-March, according to Bloomberg.
Investors should also note that the short-term correlation between Bitcoin and the Nasdaq 100 Index is at its highest level since early 2023, indicating that further gains in the tech-heavy index could coincide with a rise in the crypto market leader.
ETFs like Grayscale Bitcoin Trust GBTC, iShares Bitcoin Trust I BITE, Fidelity Wise Origin Bitcoin Fund FBTC, ProShares Bitcoin Strategy ETF BITO, ARK 21Shares Bitcoin ETF ARKB and Bitwise Bitcoin ETF Trust BITB should now be the focus.
Will the Fed cut rates soon?
Traders are increasingly pricing in the likelihood of a Fed rate cut as soon as September, following data showing slowing US inflation and a weaker labor market. Inflation, which resumed its rise in the first quarter of 2024, is finally showing signs of cooling. Furthermore, the manufacturing sector slowed further in May. Job openings also fell to their lowest level in 3 years.
According to the CME Fedwatch Tool, the probability of a 25 basis point Fed rate cut in September is now 55.3%, up from 51.3% recorded on June 3, 2024. This has resulted in a decline Treasury yields recently, easing financial conditions and benefiting speculative assets like cryptocurrencies. Notably, the benchmark US Treasury yield fell to 4.33% on June 4, compared to 4.61% recorded on May 29, 2024.
Tom Couture, vice president of digital assets strategy at Fundstrat Global Advisors, noted that crypto assets are responding positively to falling rates. Despite recent struggles to maintain levels above $70,000, optimism persists due to capital inflows into US ETFs and progress in Washington towards crypto regulatory frameworks.
Bullish outlook for Bitcoin?
Michael Novogratz, CEO of Galaxy Digital, expressed optimism about a more favorable US political environment for digital assets, predicting that Bitcoin could reach a record high of $100,000 or more by the end of the year, as cited on Bloomberg.
Want the latest recommendations from Zacks Investment Research? Today you can download the 7 best stocks for the next 30 days. Click to get this free report
Grayscale Bitcoin Trust ETF (GBTC): ETF Research Reports
ProShares Bitcoin Strategy ETF (BITO): ETF Research Reports
iShares Bitcoin Trust (IBIT): ETF Research Reports
Fidelity Wise Origin Bitcoin Fund (FBTC): ETF Research Reports
ARK 21Shares Bitcoin ETF (ARKB): ETF Research Reports
The story continues
Bitwise Bitcoin ETF (BITB): ETF Research Reports