NounsDAO on the Brink of Treasury Division Split Amidst 'Rage Quit' Uprising by NFT Holders
MicroStrategy's Significant Bitcoin Impairment Losses May Mislead: Berenberg
Binance Supercharges Bitcoin and Ether Trading in Argentine, Brazilian, and South African Currencies with Exciting Fee Promotion
Bitcoin (BTC) remained relatively stable on Tuesday despite China's recent decision to cut benchmark lending rates, which did not have a significant impact on the overall sentiment in traditional markets.
The People's Bank of China (PBOC) has announced a reduction in the one-year and five-year loan prime rates, lowering them by 10 basis points (bps) to 3.55% and 4.3% respectively. The one-year rate serves as a medium-term lending facility for corporate and household loans, while the five-year rate is the reference rate for mortgages. In addition to this, China's largest state banks recently decreased rates on demand deposits by 5 bps, as well as 15 bps on three-year and five-year time deposits. It's worth noting that a basis point represents one-hundredth of a percentage point.
The more relaxed conditions in China stand in contrast to the ongoing monetary tightening measures implemented in Western economies. These actions come in response to recent economic reports indicating a slowdown in the world's second-largest economy and a potential risk of deflation.
Bitcoin, a cryptocurrency that heavily relies on liquidity, faced challenges in finding a clear upward trend. The leading digital currency in terms of market value was trading around $26,819 at 07:27 UTC, as reported by CoinCryptoUs. It struggled to maintain its gains above $27,150 during Asian trading hours.
The Australian dollar, influenced by the Chinese economy because of the strong trade connections between the two nations, experienced a 0.7% decline against the U.S. dollar. Meanwhile, China's key stock index, CSI, showed minimal movement or even a slight decline. Additionally, MSCI's comprehensive index of Asia-Pacific shares, excluding Japan, dropped by over 0.5%, while S&P 500 futures traded 0.3% lower.
The risk-off sentiment indicates that investors have doubts about whether the rate cuts will sufficiently stabilize the decelerating economy and are seeking a more substantial stimulus package.
"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," ForexLive's analyst Justin Low said in a market update.
Some cryptocurrency experts argue that a substantial stimulus from China has the potential to counterbalance the hawkish tendencies of the U.S. Federal Reserve, the European Central Bank, and other institutions. This could ultimately lead to an upward trajectory for risk assets.
"Reports also suggest that China is readying 1 trillion yuan stimulus package. This is BIG news as it relates to global liquidity," David Brickell, director of institutional sales at crypto liquidity network Paradigm, said in the latest edition of Macro Pulse. A trillion yuan is about $140 billion.
"If global liquidity is rising, bitcoin should start to pump hard from here," Brickell added.
