Bitcoin Drops 5.20% as Trading Volume Surges Amid Market Volatility

Historically, easing monetary policies can boost risk-on assets like Bitcoin and gold. Despite the Bank of England's decision, Bitcoin's price saw a decline

The Bank of England cut its interest rate by 0.25%, bringing it down to 5%. This is the first rate cut in over four years, and it surprised many as economists were divided on the expected outcome.

However, Bitcoin’s price dropped 5.20% to $62,947.23 within the past 24 hours, according to CoinMarketCap. This decline coincides with heightened trading volumes, suggesting increased market volatility and investor activity during this period.

In contrast, trading volume surged by 34.14%, reaching $36.33 billion, indicating a high level of market participation despite the price drop.

The circulating supply remains at 19,734,243 BTC, nearing the maximum supply of 21,000,000 BTC.

Moreover, Bitcoin’s price also feels the effects of the United States Federal Reserve’s recent decision to maintain its key lending rates. On August 1, the cryptocurrency stayed below $65,000. The market anticipates further developments from the Federal Reserve, with potential impacts on liquidity and asset prices. Bitfinex analysts observed,

“A rate cut in September would provide a sense of bullishness and could generally increase liquidity in the market, which will be positive for Bitcoin and other cryptocurrencies.”

Furthermore, investment flows into US-based Bitcoin exchange-traded funds (ETFs) have influenced Bitcoin’s market performance. On July 31, US ETFs saw a modest $300,000 inflow, while the previous day recorded $18.3 million in net outflows, according to Farside Investors. ETF inflows have previously played a significant role in Bitcoin’s price movements, especially when it surpassed the $50,000 mark.

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