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Bitcoin Price Rebounds Amid Speculation on U.S. Interest Rate Cuts

Bitcoin saw a slight rise on Monday, bouncing back from bear market territory over the weekend, though uncertainty lingered amidst growing speculation about potential U.S. interest rate cuts.

The primary catalyst behind Bitcoin’s recovery was a significant decline in the dollar following disappointing nonfarm payrolls data. This boost helped the cryptocurrency recover from its recent lows, reaching around $64,247.2 by 01:31 ET (05:35 GMT) after sinking to approximately $59,000 last week, a drop of about 22% from its peak in March.

Bitcoin Benefits from Rate Cut Speculation

Market sentiment now suggests an increased likelihood of a 25 basis point cut by the Federal Reserve in September. Such an outcome could be favorable for cryptocurrencies, as they typically perform well in low-interest-rate environments with ample liquidity.

The cooling labor market provides further incentive for the Fed to consider rate cuts. However, Friday’s data follows a streak of stronger-than-expected payroll reports over the past five months, while inflation, a key factor for the Fed, remains above the central bank’s 2% annual target.

Short-term gains in Bitcoin were tempered by anticipation of further signals on U.S. rates, particularly from a series of scheduled speeches by Fed officials in the coming days. FOMC members Thomas Barkin and John Williams are slated to speak later on Monday, followed by Neel Kashkari on Tuesday.

Despite its weekend recovery, Bitcoin remained largely within a trading range observed throughout March and April, fluctuating between $60,000 and $70,000 amid diminishing enthusiasm in the crypto market.

Capital Flows and Altcoin Performance

Investment inflows into Bitcoin products, particularly spot exchange-traded funds (ETFs) approved earlier this year, have slowed significantly over the past month, with Bitcoin ETFs experiencing capital outflows for the past three weeks.

Bitcoin’s gains spilled over into other major cryptocurrencies on Monday, although their upward momentum appeared to wane. Ethereum, the second-largest crypto, rose by 2.7% to $3,166.41, while XRP added 1.4% and Solana increased by 2.8%.

Nevertheless, Bitcoin remains the primary driver of crypto valuations, accounting for nearly 55% of the total cryptocurrency market valuation.

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