Bitcoin Remains Linked to U.S. Fed as China Stimulus Measures Boost Stocks
As China unveils a new stimulus package to boost its slowing economy, Bitcoin and other major cryptocurrencies remain largely unaffected, with prices continuing to mirror U.S. Federal Reserve policies more closely than global economic events. Bitcoin has seen slight losses, falling from a high of $64,500 earlier this week to $62,700 following the announcement from the People’s Bank of China (PBOC).
China Stimulus Fails to Move Crypto Markets
On Tuesday, the PBOC announced it would cut the reserve requirement ratio for mainland banks by 50 basis points and lower the seven-day reverse repo rate by 20 basis points. The goal is to stimulate economic growth by increasing liquidity in the market and reducing borrowing costs.
While the stimulus measures pushed local stock markets into the green, with Hong Kong’s Hang Seng index climbing 3.2% and the Shanghai Composite rising 2.3%, the cryptocurrency market did not respond in kind. Bitcoin dropped 2.2% in the past 24 hours, while Ethereum and other major tokens like BNB, XRP, and Solana followed suit, falling up to 1.8%.
U.S. Market Influence on Bitcoin
Analysts suggest that Bitcoin’s lack of response to global economic changes, such as China’s stimulus, is indicative of its closer ties to U.S. monetary policy. Research from Presto Research suggests that Bitcoin's performance is more closely linked to Federal Reserve actions, particularly following last week’s Federal Open Market Committee (FOMC) meeting, which has driven correlations with U.S. stocks to near two-year highs.
Despite the global focus on China’s economy, Bitcoin traders seem more attuned to U.S. markets, and future moves by the Fed are likely to be the driving factor behind Bitcoin’s price movement in the coming months.
Source: Coindesk
