At the Q4 meeting on December 27, the People's Bank of China (PBOC) proposed a more accommodative monetary policy, with forecasts of lower interest rates in the future.
Meanwhile, the US Federal Reserve (Fed) has different plans.
According to Reuters, financial analysts predict that the People's Bank of China will adjust its target interest rate to better match credit demand and current monetary policy. As a result, crypto analysts expect this move to create a strong financial support wave for the price of Bitcoin, thanks to China's loose monetary policy and money printing.
The People's Bank of China announced on Friday that it will reduce the reserve requirement ratio and interest rates for banks at an "appropriate time". The bank also emphasized that the PBOC may continue to cut interest rates from the current target of 1.5% in 2025.
The PBOC's most recent interest rate cut was in September last year, when the rate was reduced from 1.7% to 1.5%, coinciding with the time the US Federal Reserve began cutting interest rates. Furthermore, China's 10-year and 30-year government bond yields hit record lows on Friday, reflecting expectations of an upcoming monetary easing.
The PBOC's interest rate cuts will support the Chinese economy, helping to counter the renminbi's deflationary pressures and prevent debt restructuring from causing difficulties for the economy. However, this move will also drive up the prices of financial assets, particularly stocks and Cryptoassets.
Previously, in November, the South African Reserve Bank also cut its overnight rate by 0.25% to 7.75%.
Arthur Hayes, the co-founder of BitMEX and a renowned macro strategist, predicts that the PBOC's next interest rate cut, combined with the Fed's low-interest rate policy, will drive a strong price surge for BTC and other Cryptoassets in 2025.
Hayes, who has a significant influence in the crypto community, particularly on the value of BTC and ETH, noted that after the Fed announced its interest rate cut plan in September, the price of BTC surged above $60,000. Since then, BTC has reached a record high of $100,000.
In May 2024, Hayes wrote on his Medium blog that when China starts using its "monetary weapon", it will be inevitable for US investors, especially Bitcoin ETFs, to participate in the market.
"If my theory becomes a reality, any institutional investor can easily participate in a US-listed Bitcoin ETF," Hayes shared. "Bitcoin is the best-performing asset when facing global currency devaluation, and they all recognize this."
In addition to the increasing Coinbase Premium, the inflow of funds from ETFs into BTC is a strong sign that mainstream investors are returning to BTC in January.
Disclaimer: This article is for informational purposes only and not investment advice. Investors should do their own research before making decisions. We are not responsible for your investment decisions.
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