The People’s Bank of China (PBOC) Governor Pan Gongsheng revealed several measures aimed at boosting the economy. Following the announcement, Bitcoin and Ether saw slight declines, while local stock indices surged as investors turned to equities.
Bitcoin (BTC) initially pared its weekly gains, dropping to $62,700 after hitting a nearly one-month high of $64,500 earlier in the week. The decline followed China’s unveiling of new stimulus measures designed to address its slowing economy. These measures included a 50 basis point cut in the reserve requirement ratio for mainland banks and a 20 basis point reduction in the seven-day reverse repo rate to 1.5%. Additionally, the PBOC lowered the minimum down payment for mortgages to 15%.
Over the past 24 hours, BTC dropped 2.2%, with other major cryptocurrencies like Ether (ETH), BNB (BNB), XRP (XRP), and Solana (SOL) seeing losses of up to 1.8%. These drops are often seen after significant rallies and may not be directly linked to China’s rate decisions.
Rick Maeda, a research analyst at Presto Research, commented that Bitcoin’s subdued reaction, compared to the rally in Chinese stocks, suggests that its current performance is more aligned with U.S. Federal Reserve policy and U.S. markets. He pointed out that the correlation between Bitcoin and U.S. stocks has reached a near two-year high, particularly following last week’s Federal Open Market Committee (FOMC) meeting.
The CoinDesk 20 Index (CD20), which tracks the largest cryptocurrencies, fell 1.8%. On the other hand, Celestia’s TIA token was one of the few assets to gain, jumping 17% after raising $100 million to support its ecosystem.
Stock Markets React Positively to China’s Stimulus
While digital assets didn’t react strongly to China’s rate cuts, stock indices across the region saw significant gains. The Hang Seng index in Hong Kong surged 3.2%, and the Shanghai Composite index rose 2.3%, indicating that investors were more focused on equities rather than cryptocurrencies.
Lynn Song, Chief Economist for Greater China at ING, wrote in a note that the PBOC’s policy package is expected to slightly weaken the yuan, causing the USD-CNY exchange rate to rise. However, she anticipates a gradual appreciation of the yuan in the medium term due to interest-rate differentials.
Presto Research’s Maeda added that the PBOC’s decisive actions come at a crucial time, with the Shanghai Stock Exchange recently falling below the key resistance level of 2,700. He hinted that further market support and rate cuts from the central bank could be on the horizon.
Kamala Harris Win Unlikely to Negatively Impact Crypto
In other news, traders at Singapore-based QCP Capital discussed the potential impact of Kamala Harris becoming the next U.S. president. In a Monday market update, they suggested that a Harris victory might not be as bearish for the market as initially feared.
“Harris winning the election may not be as negative for the crypto market as many believe,” QCP stated. Over the weekend, Harris pledged at a fundraiser to support the growth of the crypto sector, as part of her bid to win over crypto-friendly voters. This follows endorsements from prominent figures like Anthony Scaramucci, who are assisting her campaign’s crypto policies.
Harris also emphasized that, if elected, the Democratic Party would promote innovative technologies such as AI and digital assets while safeguarding consumers and investors, signaling a more favorable stance toward the crypto industry.
