China’s first cut in benchmark lending rates in 10 months failed to lift the mood in traditional markets, leaving Bitcoin (BTC) trading little changed on Tuesday. The People’s Bank of China (PBOC) lowered the one-year and five-year loan prime rates by 10 basis points (bps) to 3.55% and 4.3%, respectively. Despite the looser conditions, Bitcoin struggled to gather upside direction, trading near $26,819 at 07:27 UTC.
The Australian dollar, which is sensitive to the Chinese economy due to the strength of trade ties between the two countries, fell 0.7% against the U.S. dollar, and China’s benchmark equity index, CSI, traded flat to negative. MSCI’s broadest index of Asia-Pacific shares outside Japan fell more than 0.5% and S&P 500 futures traded 0.3% lower.
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 crypto observers say a bigger China stimulus could compensate for the hawkish biases of the U.S. Federal Reserve, the European Central Bank and others, eventually pushing risk assets higher. 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.
If global liquidity is rising, Bitcoin should start to pump hard from here, Brickell added.