Bank of England’s Interest Rate Cut
The Bank of England has cut its interest rate by 0.25%, lowering it to 5%, ending one of the longest periods of high interest rates. Announced on August 1st via a post on X, this move comes as inflation dropped significantly from 8% to 2% over the past year.
This is the first rate cut by the bank since March 2020. While another cut below 5% is possible later this year, potentially in November, the Bank of England governor warns against reducing rates “too quickly or by too much.”
Implications for Bitcoin
Bitcoin could benefit from this surprise rate cut, especially since economists were divided on whether the Bank of England would cut or keep rates steady. Easing monetary policy usually boosts risk-on assets like Bitcoin and gold. However, Bitcoin’s price remains stuck below $65,000 despite the UK’s first rate cut in over four years. This lackluster performance might be due to the US Federal Reserve’s decision to keep its key lending rates unchanged in August.
Nonetheless, Bitcoin might gain new liquidity and upward momentum if the US cuts rates in September.
Bitcoin Whale Activity
Despite the current uncertainty, Bitcoin whales are showing confidence by accumulating more Bitcoin. Large Bitcoin holders, who own at least 0.1% of Bitcoin’s circulating supply, added over 84,000 BTC in July, worth more than $5.4 billion. This level of accumulation is the highest since October 2014, when Bitcoin hit an 11-month low. July’s accumulation was driven by bargain hunting during a price dip below $55,000 and pauses during the recovery to $69,000. This strategic buying indicates a strong belief that Bitcoin will break out of its current price range between $50,000 and $70,000, presenting high-potential investment opportunities in the coming months.
