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Institutional funds are massively buying BTC as cooling inflation triggers expectations for interest rate cuts.
On August 13, a founder of a certain cryptocurrency quantitative digital asset fund stated in a post that a certain trading platform has experienced a large outflow of institutional funds. With inflation in the United States cooling down and the market expecting an interest rate cut next month, Bitcoin has once again become the target of institutional investors. Data shows that on Tuesday, 75% of the volume on that trading platform came from institutional investors. "Any reading above 75% leads to higher prices a week later."
The fund calculates that this week the institutional "excess demand" is about 600% of the daily output, while the current daily production of Bitcoin is approximately 450 coins. Just on Tuesday, Bitcoin companies added 810 BTC to their treasury; Monday's increase was even larger, approaching 3,000 BTC. These actions coincide with the July U.S. Consumer Price Index (CPI) data being below expectations, as well as BTC's price attempting to hit a historic high.
When asked why institutional investors are "buying crazily", the founder specifically pointed out the expectations for interest rate prospects: "Because yesterday's inflation data met expectations, this means that the Federal Reserve is almost certain to cut interest rates next month, and may cut rates three times this year. Given the poor employment background, the market is even assessing the possibility of a significant 0.5% rate cut. Lower interest rates = rising risk assets, and Bitcoin has always been the fastest horse."