Investors Bet on Fed Cut as Bitcoin Breaks $114K Barrier

Bitcoin surged past $114,000 on Wednesday, marking a significant breakout after days of consolidation, as the U.S. Producer Price Index (PPI) unexpectedly dropped by 0.1% in August, cooling inflationary pressures and boosting expectations of a Federal Reserve rate cut. The rally was supported by a 17% rise in trading volume over the past 24 hours, and Bitcoin’s open interest increased by 2.11%, reflecting stronger bullish positioning. Analysts at B2BINPAY noted that Bitcoin could remain in a $110,000 to $118,000 range until the Fed meeting in late September, with the potential for a move toward $120,000 if it clears $115,000 or a pullback toward $107,000 if it falls below $112,000.

Ethereum also benefited from the favorable macroeconomic backdrop, rising 1.67% to $4,373.72, though it failed to maintain its intraday high of $4,450.42. The broader cryptocurrency market saw over $264 million in liquidations, with $158 million in short positions being wiped out, indicating increased volatility and speculative activity. Meanwhile, XRP climbed 1.55% to $2.99, and Dogecoin advanced 3.30% to $0.2465. XRP’s exchange reserves experienced a significant increase of 1.2 billion tokens in a single day, with Binance accounting for 610 million of the inflow. The surge came at a key support level and coincided with a 8.43% price gain on softer-than-expected PPI data.

The global cryptocurrency market capitalization reached $3.95 trillion, rising by 2.34% in the last 24 hours, as investors shifted attention to the upcoming U.S. inflation report. The CME FedWatch tool indicated that traders priced in a 92% probability of a 25-basis-point rate cut, reinforcing the positive sentiment around digital assets. Analysts highlighted the potential for Bitcoin to follow gold’s performance—up 40% year-to-date—as looser monetary policy could drive liquidity into risk-on assets. However, Ethereum faces near-term headwinds from macroeconomic uncertainty and weak ETF demand, with retail sentiment on platforms like Stocktwits remaining extremely bearish.

Futures demand for XRP increased, with CME open interest rising 74% month-over-month. The token’s price climbed above $3 on Wednesday, fueled by ETF optimism and strategic positioning on exchanges. Analysts noted that while the inflows could indicate liquidity preparation or large holder activity, the price’s muted response to large inflows suggested a deep liquidity pool limiting short-term upside. Institutional demand for XRP futures also grew, with broader futures trading at a 7% premium to the spot market, signaling balanced leverage but underperformance compared to other altcoins.

As the market absorbs the latest inflation data and positions ahead of the Federal Reserve’s upcoming meeting, Bitcoin and other major cryptocurrencies remain under the spotlight. The interplay between macroeconomic trends and on-chain activity will likely shape the near-term trajectory of the crypto market, with key price levels and positioning metrics offering insight into potential directional moves.