China’s recent decision to decrease interest rates has significantly impacted the cryptocurrency market. The People’s Bank of China (PBoC) reduced the seven-day reverse repo rate by 0.1% to 1.7%, alongside adjustments to one- to five-year interest rates. This unexpected move was driven by a notable slowdown in economic growth in the second quarter, as highlighted by Macquarie Group’s chief China economist, Larry Hu.
Why Did China Cut Rates?
Holger Zschaepitz pointed out that it has been a year since China last adjusted its rates. Unlike China, other major economies such as the US, Canada, and the EU have yet to follow suit, though a 25 basis point rate cut is anticipated during the US Federal Reserve’s September meeting. Consequently, market reactions have varied, with the stock market showing tepid enthusiasm.
How Does This Affect Cryptocurrencies?
Crypto commentator TMXC Trades noted that investors had been betting on a global easing cycle entering 2024, which would reverse significant monetary tightening. However, mid-July has not seen these predictions come to fruition. Amid the rate cut, the cryptocurrency market displayed a bullish sentiment.
Key Insights for Investors
Investors should consider the following points in light of the recent developments:
- China’s rate cut might signal a broader easing trend, influencing global markets.
- Bitcoin (BTC) has shown resilience and may reach new all-time highs by September.
- Altcoins could follow Bitcoin’s trajectory, offering potential gains.
- A pullback to $65,000 for BTC would not be unusual; targets are around $71,500 to $73,777.
Rekt Capital observed that a five-week pullback was recovered in just two weeks, indicating a renewed bullish sentiment. By September, or within two months, Bitcoin (BTC) is expected to break new all-time records, potentially leading to new highs for altcoins as well.
Michael Poppe confirmed these predictions, stating that if BTC holds the $65,000 level and closes weekly within the current range, it could target $73,777. The analyst emphasized that maintaining these levels is crucial for further upward momentum.