During their December 27th quarterly meeting, the People’s Bank of China’s committee suggested adopting a less restrictive monetary policy that leans towards lower interest rates in the future.
At the same time, the US Fed has different plans.
China Announces Interest Rate Cut
From my perspective as a crypto investor, financial analysts anticipate that the bank might tweak its target funds rate to ensure credit demand aligns more closely with their monetary policy, as reported by Reuters. This could potentially lead to an influx of monetary support for Bitcoin prices in China’s yuan printing presses, according to crypto analysts.
On Friday, China’s monetary authority declared a reduction in the banks’ reserve requirement ratio and interest rates, hinting at an opportune moment. The bank suggests that the People’s Bank of China might reduce China’s interest rates from their current goal of 1.5% within the year 2025.
The People’s Bank of China reduced interest rates from 1.7% to 1.5% in September, which was the same month that the Federal Reserve shifted its policy towards lowering rates. Additionally, the yields on China’s 10-year and 30-year government bonds reached new lows on Friday due to predictions of additional monetary loosening.
Arthur Hayes Predicts ‘Glorious’ Bitcoin Rally
Lowering the interest rate by China’s central bank aims to combat a potentially debilitating rise in yuan deflation, which could lead to problematic adjustments in loans. However, this move is likely to increase the cost of various financial assets, particularly shares and cryptocurrencies.
South Africa cut its main overnight money market rate by 0.25% to 7.75% in November.
Arthur Hayes, one of the co-founders of BitMEX, anticipates that the projected interest rate reduction in Beijing will join forces with the Federal Reserve’s low-interest rate environment, leading to an impressive surge or rally for Bitcoin and various cryptocurrencies around 2025.
Hayes serves as a prominent strategic analyst, focusing on macro-level price movements of significant cryptocurrencies like Bitcoin and Ethereum.
Following the US Federal Open Market Committee’s (FOMC) decision to lower interest rates in September, Bitcoin’s value surged past the $60,000 mark. Subsequently, this digital currency hit unprecedented peaks at around $100,000.
Approximately seven months ago, in May, Hayes expressed on his Medium blog that if China unleashes its monetary “bazooka” (large-scale economic stimulus), investing in a Wall Street Bitcoin ETF would be an obvious choice for U.S. investors who follow regulations.
Should my theory materialize, it would be effortless for any institutional investor to purchase a U.S.-listed Bitcoin Exchange-Traded Fund (ETF),” Hayes penned down. “Bitcoin has proven to be the top-performing asset amid global devaluation of fiat currencies, and they are well aware of this fact.
Alongside an increasing Coinbase Premium Index, the influx of Bitcoin ETF investments is another clear sign that traditional investors are re-entering the Bitcoin market during January.
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2025-01-05 16:56