Bitcoin Cautious as China Reduces Benchmark Rate

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Bitcoin gave up its intraday gains as China’s central bank revamped its benchmark lending rate lower to tackle slowing economic growth.

Bitcoin steady as global regulators set to discuss economic stimulus this week | Image Credits: TradingView.com

The top cryptocurrency dropped by $242, or 2.21 percent, to $10,705 as of 16:48 Shanghai time. The move downhill appeared in tandem with the Chinese Yuan, which too fell in the latter half of the Asian trading session against the US dollar. Mizuho currency strategist Ken Cheung noted that – at six bps lower, or 4.25 percent – the People’s Bank of China’s rate cut is too slim to move forex and stock market. Bitcoin’s downside move, therefore, appeared idiosyncratic than reactive to Chinese dovishness.

As its session’s high, the cryptocurrency was trading at $10,953 on San Francisco-based Coinbase exchange.

Global Markets and Trump’s Tweet

PBoC’s announcement led China’s CSI 300 down 0.2 percent. Elsewhere in Asian markets, Japan’s Topix surged 0.8 percent, and Australia’s S&P/ASX 200 gained 1.6 percent. Meanwhile, Hang Seng index of riot-stuck Hong Kong showed no-profit-no-loss readings after territory’s leader Carrie Lam promised to initiate dialogue with protestors.

On the other hand, European markets opened flat while US futures hinted minor gains. Even government bonds, which last week became go-to safe-havens for investors, looked flat.

The steadiness appeared as investors prepare to digest the outcome of an annual meeting of global central bankers in Jackson Hole, Wyoming, starting this Thursday. Speculation is increasing that they would launch a fresh wave of economic stimulus programs against the rising fears of a recession. Germany, for instance, is reportedly preparing to introduce monetary easing policies should its economy fall into a depression.

The US President Donald Trump, meanwhile, is also creating pressure on the Federal Reserve to introduce a 100 bps rate cut, in addition to more dollar-printing.

“The Fed Rate, over a fairly short period of time, should be reduced by at least 100 basis points, with perhaps some quantitative easing as well,” Trump tweeted on Monday. “If that happened, our Economy would be even better, and the World Economy would be greatly and quickly enhanced-good for everyone!”

Bitcoin Evangelism

The endless possibilities of weaker national currencies are prompting bitcoin evangelists to propose the cryptocurrency as a solution.

“Be prepared for quantitative easing and even lower interest rates, as the President just called for both,” said noted crypto analyst Rhythm Trader. “This is nothing more than printing money out of thin air to pump the bags of the rich before the recession hits everyone else. Bitcoin is a protest against this absurdity.”

Morgan Creek Digital Assets co-founder Anthony Pompliano, too, said that bitcoin’s underlying scarcity could help its holders survive the fiat bubble.

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