Bitcoin Struggles for Momentum

Bitcoin (BTC) prices were relatively stable on Tuesday, as China’s first reduction in benchmark lending rates in ten months failed to boost sentiment on traditional markets.

The People’s Bank of China (PBOC) reduced the prime rates for one-year and five-year loans by ten basis points (bps) to 3.55 percent and 4.30 percent, respectively.

The one-year rate is a medium-term lending facility for corporate and household loans, whereas the five-year rate is the mortgage reference rate.

Last week, China’s largest state banks reduced deposit rates by five basis points on demand deposits and 15 basis points on 3- and 5-year time deposits.

One basis point is equal to one hundredth of one percentage point.

The looser conditions contrast with the continued monetary tightening in Western economies and follow recent economic reports indicating that the second-largest economy in the world is losing momentum and is on the verge of deflation.

Bitcoin, a pure liquidity bet, struggled to gain upward momentum.

According to data, the largest cryptocurrency by market capitalization changed hands near $26,819 at 07:27 UTC after failing to maintain gains above $27,150 during Asian trading hours.

Due to the strength of trade connections between Australia and China, the Australian dollar fell 0.7% against the U.S. dollar.

China’s benchmark equity index, CSI, traded in a flat to negative range. MSCI’s broadest index of Asia-Pacific equities, excluding Japan, declined more than 0.5%, while S&P 500 futures dropped 0.3%.

The move away from risk indicates that investors are uncertain that the rate cuts will be sufficient to stabilize the economy and are seeking a larger stimulus package.

This could be the market’s way of saying that the rate cuts indicate more problems than they are a solution to China’s recent economic difficulties, according to a market update by ForexLive’s Justin Low.

According to some crypto analysts, a more significant Chinese stimulus could offset the United States’ hawkish tendencies.

The Federal Reserve, the European Central Bank, and others pushed risk assets higher in the long run.

In the latest issue of Macro Pulse, David Brickell, director of institutional sales at crypto liquidity network Paradigm, stated, “Reports also indicate that China is preparing a 1 trillion yuan stimulus package, which is HUGE news for global liquidity.”

A trillion yuan is equivalent to approximately $140 billion.

“If global liquidity is rising, bitcoin should start to pump hard from here,” Brickell said.