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ECB Expected to Cut Interest Rates as Traders Pile Into Fed Easing Bets
Renewed bias for rate cuts could ease financial conditions, offering bullish cues to risk assets, including bitcoin.
Mar 6, 2025, 9:35 a.m.
What to know:
- The European Central Bank (ECB) is anticipated to lower interest rates to 2.65%, despite a significant European debt sell-off.
- This expected easing could contribute to the ongoing global liquidity easing, potentially providing bullish signals for risk assets, including cryptocurrencies.
The European Central Bank (ECB) is expected to cut interest rates on Thursday to 2.65%, continuing its easing from a 4.5% peak amid increased volatility in bond markets.
The expected easing comes as markets reprice at least three Fed rate cuts for 2025 and Germany and China take the fiscal easing route to shore up their respective economies.
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In other words, the ECB's impending easing could only add to the ongoing global liquidity easing, offering bullish cues to risk assets, including cryptocurrencies.
"Overall, liquidity conditions are supportive and rising, to keep risk and crypto pushing higher, despite this recent correction on growth concerns," founders of the newsletter service LondonCryptoclub said in Thursday's edition.
Volatile bond markets
The European Union's headline inflation is still not at the central bank's target of 2%, which raises concerns about the impending rate cut and its impact on the European bond markets.
Germany’s 10-year bund has climbed to 2.8%, its highest since 2011, pricing in more supply in the wake of Germany's fiscal stimulus announcement. The spike has narrowed the U.S.-German yield spread in favor of the euro, driving the dollar index lower. That, coupled with the tariff threat, has the DXY index falling faster than in President Trump's first term.
The U.K. bond yields have also topped those of the U.S. Meanwhile, Japan’s 10-year bond has surpassed 1.5%, a 17-year high, as the Bank of Japan struggles to rein in inflation after three rate hikes after almost ten years of negative interest rates.
Volatile bond markets can cause financial tightening, forcing investors to scale back exposure to riskier assets.
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What to know:
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- GoPlus Intelligence's Token Security API averaged 717 million monthly calls year-to-date in 2025 , with a peak of nearly 1 billion calls in February 2025. Total blockchain-level requests, including transaction simulations, averaged an additional 350 million per month.
- Since its January 2025 launch , the $GPS token has registered over $5B in total spot volume and $10B in derivatives volume in 2025. Monthly spot volume peaked in March 2025 at over $1.1B , while derivatives volume peaked the same month at over $4B.
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Coinbase Sees Crypto Recovery Ahead as Liquidity Improves and Fed Rate Cut Odds Climb
The crypto exchange also took note of a so-called AI bubble that continues to go strong and a weaker U.S. dollar.
What to know:
- Coinbase Institutional is seeing a potential December recovery in crypto, citing improving liquidity and a shift in macroeconomic conditions that could favor risk assets like bitcoin.
- The firm's optimism is driven by rising odds of Federal Reserve rate cuts, with markets pricing in a 93% chance easing next week, and improving liquidity conditions.
- Several recent institutional developments, including Vanguard's crypto ETF policy reversal and Bank of America's greenlighting of crypto allocations, have contributed to bitcoin's rebound from recent lows.
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