The US Federal Reserve cut rates this week by 25 basis point, giving the economy the needed boost after years of interest rate hikes to control inflation. Cuts in interest rates are likely to boost riskier assets like Bitcoin (BTC).
Fed Lowers Interest Rate and Bitcoin Supply Ratio Drops
Arab Chain contributed a CryptoQuant Quicktake to show that Binance data showed the recent interest rate cuts have rekindled investor interest in BTC. The exchange supply ratio is down to 0.0291, indicating that more investors are opting to hold BTC. withdraw Buy BTC on exchanges, but hold onto it instead of selling.
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Arab Chain’s analysis was supported by the graph below, which depicts a falling exchange supply while BTC prices continue to soar. Analyst noted that interest rates were cut, which increased the risk appetite of the investors and improved the liquidity on the market.
For the moment, this behavior could ease the pressure of selling BTC. As Bitcoin continues to hold above $115,000, the low supply of exchange is increasing relative demand.
Analysts noted that, if BTC continues to be withdrawn from cryptocurrency exchanges at its current rate, the digital asset could target $120,000 as a resistance level. The Fed’s move must drive liquidity into digital assets. Arab Chain has added:
A rising Bitcoin price and a continued drop in the Exchange Supply Ratio reinforce the bullish outlook, particularly if the traditional markets stabilise after the Fed decision. Conversely, if the Exchange Supply Ratio turns upward again (if Bitcoin reenters exchanges), it could signal that investors are preparing to take profits at levels near 118K–120K.
Titan of Crypto also had thoughts similar to those expressed by Titan. The analyst, in an X posting, shared this chart and said that BTC was currently under the fair value gap. A daily close above this gap – highlighted in red – could pave the way for a new high for BTC.
BTC Supply Crunch: Is it Real?
A declining exchange supply ratio further suggests that BTC may be approaching a bullish ‘supply crunch’ that could lead to significant Price appreciation of the digital asset is expected in the short term.
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Bitcoin Scarcity Index: Recently Published recorded BTC’s first price spike since 2025 is a sign of potential upward pressure. BTC outflows Binance continues to release digital assets at an accelerated pace. This further reduces the active supply of this asset.
Some people say that concerns The lack of involvement of whales with recent BTC pricing action is a major factor. BTC is currently trading at $116.374, a drop of 1.3% over the last 24 hours.
Charts from TradingView.com, X and CryptoQuant.
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Source: www.newsbtc.com
