Bitcoin (BTC) continues to trade with little change, even as China experiences its first benchmark lending rate cut in ten months. The People’s Bank of China (PBOC) recently reduced the one-year and five-year loan prime rates by 10 basis points to 3.55% and 4.3%, respectively. These decisions came after China’s biggest state banks trimmed their rates on demand deposits and time deposits of varying durations.
This move by China’s central bank is seen as a reaction to recent economic reports indicating that China, the world’s second-largest economy, is losing steam and nearing deflation. Despite this, BTC struggles to find an upward trajectory. At 07:27 UTC, the cryptocurrency changed hands near $26,819, having failed to maintain gains above $27,150 during Asian trading hours.
The rate cut’s impact is also evident in the Australian dollar, which fell by 0.7% against the U.S. dollar. The Chinese benchmark equity index, CSI, showed little to no change in trading, while the MSCI’s index of Asia-Pacific shares outside Japan went down by more than 0.5%. These moves underline investor skepticism over whether the rate cuts are sufficient to revive China’s slowing economy.
Some market participants interpret the rate cuts as a sign of deeper economic issues rather than a solution. “That could be the market’s way of saying that the rate cuts are telling of more problems than it being a solution to China’s recent economic struggles,” says ForexLive’s analyst Justin Low.
Nevertheless, several cryptocurrency enthusiasts are considering the possibility that a larger stimulus package from China could offset hawkish biases from other central banks such as the U.S. Federal Reserve and the European Central Bank. “Reports also suggest that China is readying 1 trillion yuan stimulus package. This is BIG news as it relates to global liquidity,” claims David Brickell, director of institutional sales at crypto liquidity network Paradigm. A trillion yuan amounts to around $140 billion.
The anticipation is that boosted global liquidity may bring significant benefits to bitcoin. “If global liquidity is rising, bitcoin should start to pump hard from here,” added Brickell. Overall, the impact of China’s rate cuts on the cryptocurrency market remains uncertain, with investors and enthusiasts alike keeping a close eye on both the traditional and digital financial landscapes.
Source: Coindesk
