China’s ‘Bazooka’ Interest Rate Will Boost Bitcoin Prices

At its fourth quarter meeting on December 27, the People’s Bank of China (POBC) committee proposed a more dovish policy (low interest rates) going forward.

At the same time, the US Fed has different plans.

China announces an interest rate cut

According to Reuters, financial analysts expect the bank to make adjustments to the funds target rate to better align credit demand with monetary policy. As a result, crypto analysts expect a huge wave of monetary support for Bitcoin prices in the Middle Kingdom’s yuan printing press.

China’s central bank issued a statement on Friday announcing a cut in banks’ reserve requirement ratio and interest rates “at the right time.” The central bank says the PBOC is likely to cut China’s interest rates further from the current target of 1.5% as soon as 2025.

The PBOC last cut rates to 1.5% from 1.7% in September, the same month the Federal Reserve pivoted to a rate-cutting regime. Also, China’s 10-year and 30-year Treasury yields hit record lows on Friday amid expectations of further monetary easing.

Arthur Hayes Predicts ‘Glorious’ Bitcoin Rally

The interest rate cut at China’s central bank will help counter the deflationary yuan that threatens to spiral into a debt-crippling lending revaluation. But it will also increase the prices of the basket of financial goods, especially stocks and cryptocurrencies.

South Africa cut its main overnight money market rate by 0.25% to 7.75% in November.

BitMEX co-founder Arthur Hayes predicted that the upcoming rate cut in Beijing will combine with the Fed’s low rate regime and lead to a “glorious” rally for Bitcoin and other crypto assets in 2025.

Hayes is an influential macro strategy analyst for the price levels of major cryptocurrencies such as Bitcoin and Ethereum.

Immediately after the US Federal Open Market Committee (FOMC) announced a rate cut in September, the price of Bitcoin soared above the $60,000 level. Since then, the little orange coin has reached record levels of $100,000.

Seven months ago, in May, Hayes wrote on his Medium blog that when China pulls out the monetary “bazooka,” buying a Wall Street Bitcoin ETF will be a no-brainer for regulated investors in the US.

“If my theory comes true, it’s trivial for any institutional investor to buy one of the US-listed Bitcoin ETFs,” Hayes wrote. “Bitcoin is the best-performing asset in the face of global fiat degradation, and they know it.”

In addition to the rise in Coinbase’s premium index, Bitcoin ETF flows are two strong indicators that mainstream investors are returning to Bitcoin in January.

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