People’s Bank of China’s Incentives Fail to Affect Markets

Bitcoin (BTC) reached a nearly one-month high of $64,500 after China announced new stimulus measures to boost its slowing economy, before falling to $62,700 shortly thereafter.

The People’s Bank of China (PBoC) announced that it has cut the reserve requirement ratio for its banks by 50 basis points and the seven-day reverse repo rate (the interest rate at which a central bank borrows from commercial banks) by 20 basis points to 1.5%. In addition, the central bank has lowered the minimum down payment requirement for mortgages to 15%.

Data shows that BTC is down 2.2% in the last 24 hours, leading to losses across the majors. Ether (ETH), BNB Chain (BNB), XRP (XRP), and Solana (SOL) are also down by up to 1.8% in the same time frame.

Celestia’s TIA tokens are among the gainers, up 17% following the announcement of a new $100 million fundraising.

While digital assets did not react to interest rate cuts and stimulus measures, equity indices in the region turned green, indicating that local traders are focusing on stocks rather than crypto.

Hong Kong’s Hang Seng index rose 3.2% on the news, while the Shanghai Composite index is up 2.3%.

Lynn Song, Chief Economist for ING’s Greater China region, wrote that today’s policy package is expected to weaken the yuan and the USD-CNY exchange rate has risen in response to the PBoC’s easing measures. However, medium-term factors such as interest rate spreads point to a gradual appreciation trend for the CNY.