Bitcoin and ether are slightly down after China’s central bank announced aggressive stimulus measures.
Local equities indices are up as investors move into stocks as a result of the central bank’s measures.
Bitcoin (BTC) started to pare weekly gains early Tuesday to fall to $62,700, following a nearly one-month high of $64,500 at the start of the week, as China unveiled fresh stimulus to revive a slowing economy.
The People’s Bank of China (PBoC) announced Tuesday morning that it was cutting the reserve requirement ratio for mainland banks by 50 basis points while also lowering the seven-day reverse repo rate (the interest rate at which a central bank borrows funds from commercial banks) by 20 basis points to 1.5%. In addition, the central bank cut the minimum down payment requirement for mortgages to 15%.
Data shows that BTC fell 2.2% in the past 24 hours, leading to losses among major tokens. Ether (ETH), BNB Chain’s (BNB), XRP (XRP) and Solana’s (SOL) lost up to 1.8%. Such corrections are common after a large rally and may not be necessarily tied to China’s rate decision.
The broad-based CoinDesk 20 (CD20), a liquid fund tracking prices of the largest tokens, dropped 1.8%.
Celestia’s TIA tokens were among the few gainers in the market with a 17% bump since Monday, following the announcement of a fresh $100 million fundraise in a boost to its ecosystem.
Stocks Move on China Cuts
While digital assets didn’t respond to the rate cuts and stimulus measures, stock indices around the region were deep in the green, suggesting that local traders were more fixated on equities rather than crypto.
Hong Kong’s Hang Seng index is up 3.2% on the news, while the Shanghai Composite index is up 2.3%.
In a published note, Lynn Song, Chief Economist for Greater China at ING, wrote that today’s policy package is expected to weaken the yuan slightly, with the USD-CNY exchange rate rising in response to the PBoC’s easing measures. However, medium-term factors like interest rate spreads suggest a gradual appreciation trend for the CNY.
Harris Win Unlikely to be “Bearish”
Elsewhere, traders at Singapore-based QCP Capital said in a Monday market broadcast that Democrat Kamala Harris becoming the next U.S. president may not be as bearish as the market assumes.
“A Harris win this election may not be as bearish as the market thinks. In another bid to win over the crypto vote, Kamala Harris vowed at a fundraiser over the weekend to help the crypto sector grow,” QCP said. “This is on top of Anthony Scaramucci and other crypto advocates working alongside her campaign’s crypto policies.”
Harris said over the weekend that the party, if elected, will “encourage innovative technologies like AI and digital assets while protecting consumers and investors,” marking one of the few times the candidate has appeared warm toward the crypto sector.