Bitcoin demand among U.S. investors spiked to its highest level in over a month after the Federal Reserve signaled the likelihood of lowering interest rates. This surge in interest was reflected in the Coinbase Premium Index, which hit a 39-day high as Bitcoin reclaimed the $63,000 level.
U.S. Investor Demand on the Rise
According to data from CryptoQuant, Bitcoin’s Coinbase Premium Index, which tracks the price gap between Bitcoin on Coinbase Pro and Binance, reached 0.0114 on August 23. This marked its highest reading since July 15, indicating increased buying pressure from U.S. investors compared to those in other parts of the world.
CryptoQuant analyst Julio Moreno highlighted this trend in an August 24 post on X (formerly Twitter), noting that U.S. demand surged following the Federal Reserve’s comments. “Bitcoin demand in the US spiked today as the Fed signaled the cycle of lower interest rates will begin,” Moreno wrote.
Positive readings on the Coinbase Premium Index suggest strong buying pressure, while negative readings can indicate a sell-off. This index previously turned negative just before “Crypto Black Monday” on August 5, when Bitcoin’s price dropped below $50,000.
Fed’s Dovish Stance Fuels Market Optimism
The increase in Bitcoin demand came after Federal Reserve Chair Jerome Powell hinted at the possibility of future interest rate cuts during his speech at the annual Jackson Hole symposium. Although Powell did not specify when these cuts would occur, his remarks were interpreted as a sign of upcoming policy easing. “The time has come for policy to adjust,” Powell stated, adding to market optimism.
As of the time of publication, Bitcoin was trading at $63,978, reflecting a 5.46% increase since August 22, based on data from CoinMarketCap. The cryptocurrency briefly surged to $64,769, a level it hadn’t reached since August 2, before retreating slightly.
Bitcoin Price Dynamics and Market Sentiment
Bitcoin’s recent price movements have been closely tied to broader macroeconomic signals, particularly those related to U.S. monetary policy. Just hours before the Fed’s announcement, Bitcoin was hovering around the $60,000 mark, with market participants wary of potential selling pressure from miners. The cost of mining Bitcoin was still significantly higher at $72,224, raising concerns about the sustainability of current prices.
Crypto analyst Will Clemente pointed out that the market has perceived Bitcoin prices below $60,000 as a value buy for the past six months. “There’s still 7 days left in the month, but there’s no denying that the market has seen sub-$60k BTC as value for 6 months now,” Clemente commented on August 23.
While the recent surge in Bitcoin’s price is encouraging, it remains to be seen how long this momentum will last, especially with the uncertainty surrounding the timing of the Fed’s interest rate cuts.
