China’s central bank has announced broad monetary stimulus measures and rate cuts to boost the economy, a trend that might ultimately favor Bitcoin (BTC).
On Tuesday, Pan Gongsheng, the governor of the People’s Bank of China (PBoC), noted that the financial institution plans to cut banks’ reserve requirement ratio by 50 basis points. This is in addition to a further 20-basis-point reduction of key interest rates to support a price recovery.
He made this revelation while speaking at a news conference alongside officials from two other financial regulatory agencies. It’ll be interesting to see how Bitcoin reacts to this.
PBoC’s Potential Rate Cut Boosts China’s Stock Prices
Apart from the earlier cuts, Gongsheng also mentioned that the PBoC plans to cut the seven-day repo rate by 0.2% to 1.5%. He hinted at a possible fall in deposit and other interest rates. In response to this announcement, most Chinese stocks and bonds surged. The Shanghai Stock Exchange recorded a major boost, with some stocks jumping 4% as of the close of trading.
Some market observers and analysts expected this reaction. Capital Economics analyst Julian Evans-Pritchard stated, “This is the most significant PBOC stimulus package since the early days of the pandemic.”
On X, Dan Tapiero, the founder and CEO of 1Roundtable Partners, suggested that China’s “bad” situation could pump more liquidity into the economy. Even Kelvin Wong, a senior market analyst at Oanda, Singapore, highlighted the presence of more liquidity in the market. He also noted that this extra liquidity is not channeled to boost internal demand, a key catalyst for Bitcoin.
If it were, the current state of feeble consumer and business confidence in China would turn around.
Incoming Bitcoin Rally?
Then again, Gongsheng believes that the news of China’s interest rate cuts is bullish for assets like gold and Bitcoin (BTC). In the meantime, Bitcoin is already consolidating at nearly $64,000 while bulls and bears struggle at the infinite turn point.
Bitcoin price was trading for $63,477.25 after a 0.26% increase in the last 24 hours. Key projections from technical analysts show that the coin is heading towards the $100,000 level.
Another trigger for Bitcoin to reach this level is Russia’s recent pivot towards crypto for cross-border payments with China. Experts believe the next Bitcoin price rally will not be driven by the influx of institutional investors or the inflows in spot Bitcoin ETFs. Rather, it will be a function of macro and technical factors.
Fed Interest Rate Cut Triggers Bitcoin Price Action
Bitcoin’s current price action started after the Federal Open Market Committee (FOMC) meeting and the US Federal Reserve’s 50-basis-point rate cut decision.
Once the announcement was made, Bitcoin, like other crypto assets, showed optimism. It even hinted at the possibility of heading towards its ATH after it claimed $62,000 on September 18.
However, for the flagship coin to hit $100,000, it needs to break above $67,000 and consolidate. Traders are already taking long positions on Bitcoin investments. The thought around monetary easing has given them the confidence to dive into the market.
Despite this, critics like Peter Schiff do not think investing in Bitcoin is the best move.
