Bank

GameStop

Bitcoin

Bitcoin inflows could see an increase this week following a key monetary policy decision in the European Union.
The European Central Bank (ECB) is expected to cut interest rates by 0.25% to 4.25% on June 6. The rate cut could boost investor appetite for risk assets, such as Bitcoin (<a href="https://cointelegraph.com/bitcoin-price">BTC</a>), according to Jag Kooner, head of derivatives at Bitfinex. Kooner told Cointelegraph:
<blockquote data-ct-non-breakable="true">
 “The European Central Bank is expected to cut interest rates next week to stimulate economic growth. Lower rates typically weaken the euro and increase liquidity, which can boost risk assets, including Bitcoin.”
</blockquote>
The rate cut expectations come during a period of slowing inflation in Europe. May’s headline Consumer Price Index (CPI) is expected to come in at 2.6% — potentially marking the eighth consecutive month of inflation below the 3% mark.
Related: <a href="https://cointelegraph.com/news/roaring-kitty-300m-gamestop-gains-first-gme-billionaire">Roaring Kitty’s GameStop gains soar to $300M, billionaire status near</a>
<h2 id="bullish-outlook-bitcoin-will-follow-equities-higher">Bullish outlook: Bitcoin will follow equities higher</h2>
According to James Wo, founder and CEO of Digital Financial Group, the potential interest rate cut could boost traditional equity markets and give Bitcoin more upward momentum. 
Wo told Cointelegraph:
<blockquote data-ct-non-breakable="true">
 “Cutting of interest rates will impact traditional equities positively, as seen from how European stocks rose after dovish comments from the ECB Governing Council earlier in May. This might translate to a shift in liquidity to more risk-on assets, such as Bitcoin, as well, boosting its price.”
</blockquote>
Two of Europe’s flagship stock indexes, the STOXX 600 and DAX 40 rose during May, along with Bitcoin’s price. The STOXX 600 rose over 3.3%, while the DAX 40 rose over 3.8% during the past 30 days, when BTC’s price rose over 17.4%, according to BitStamp.
<figure data-ct-non-breakable="true">
 <img src="https://s3.cointelegraph.com/uploads/2024-06/b62c75f7-cf5a-4f01-8948-37a6de89206d.png" alt="" title="">
 <figcaption style="text-align: center;">
 BTC, DAX 40, STOXX 600, 1-month chart. Source: BitStamp
 </figcaption>
</figure>
Related: <a href="https://cointelegraph.com/news/eu-elections-ether-etf-approval">EU elections ‘wildcard’ could pave the way for first Ether ETF</a>
<h2 id="alternative-outlook-bitcoin-decouples-from-equities-as-digital-gold">Alternative outlook: Bitcoin decouples from equities as “digital gold”</h2>
Bitcoin’s historical correlation with the traditional equities market has been mixed. However, Bitcoin could follow equities markets higher in an economic stimulus-driven environment. Kooner told Cointelegraph:
<blockquote data-ct-non-breakable="true">
 “Historically, Bitcoin has shown a mixed correlation with equities. During economic stress, Bitcoin often mirrors stock market trends as investors liquidate assets. In a stimulus-driven environment with lower rates, Bitcoin may benefit alongside equities due to increased liquidity.”
</blockquote>
However, Bitcoin’s price has rallied strongly this year despite the lagging equities market in the world’s largest economy, the United States. The S&amp;P 500 index has grown over 11.5% year-to-date (YTD), while Bitcoin’s price rose is up 57.6% YTD, according to <a href="https://www.tradingview.com/chart/3Z94myyP/?symbol=BITSTAMP%3ABTCUSD" target="_blank" rel="noopener nofollow">B</a>itStamp.
<figure data-ct-non-breakable="true">
 <img src="https://s3.cointelegraph.com/uploads/2024-06/892a34ba-6de7-463b-b071-4ec9d2e44a06.png" alt="" title="">
 <figcaption style="text-align: center;">
 BTC &amp; S&amp;P 500, Year-to-date. Source: TradingView
 </figcaption>
</figure>
“While US equities have retraced, BTC has remained strong. It remains to be seen if this is crypto lagging or relative strength,” added Kooner.
Magazine: <a href="https://cointelegraph.com/magazine/cailtlyn-jenner-token-scammer-sahil-arora-celebrity-network-leaked-price-list/">Caitlyn Jenner meme coin ‘mastermind’s’ celebrity price list leaked</a>

Will Bitcoin benefit from a European Central Bank rate cut?

Table of Contents

Cointelegraph

Other articles published on Jun 3, 2024

Binance co-founder denies responsibility for $1M trading loss on hacked account

Bitcoin Transaction Volume Hits A New Low, BTC Price Drop Likely?

Donald Trump Embraces Crypto – Top Altcoins to Diversify Within Anticipation for the Upcoming Rally

Cryptos Hitting New All-time High This Early June

Binance to Delist Waves, OMG, Nem and Wrapped NXM From its Platform

After US, HK, Australia Enter the Spot ETF Market, Live on June 4

Join our free newsletter for daily crypto updates!