5 min readBitcoin continues to trade around the 64k level, boosted by optimism surrounding global monetary easing, which has spurred flows into riskier assets.
Other altcoins are trading quietly, with Solana and Chainlink among the top performers + 1.4% at the time of writing.
China unveiled a vast stimulus package
A slew of stimulus measures from China yesterday lifted the overall market mood. The world’s second-largest economy unleashed a barrage of supportive measures, including cuts to its benchmark interest rate, as it grapples with a slowing economy due to uneven industrial output, weak domestic consumption, and a troubled property sector.
Beijing’s stimulus package was geared toward injecting liquidity into the economy through measures such as cutting mortgage rates, reducing banks’ capital reserves, and providing government funding to boost the stock market, which marked the most comprehensive stimulus package seen in years.
What does the Chinese stimulus mean for Bitcoin?
The stimulus program’s goal is to create economic quiddity, which could increase speculation on a range of asset classes, including cryptocurrencies. That said, the direct relationship between Chinese liquidity and Bitcoin is less evident now, given that China banned cryptocurrency mining in 2021.
However, Bitcoin is still strongly correlated to global liquidity, and Chinese easing policies could lead to changes in risk appetite, particularly given the timing—just days after the Federal Reserve’s rate decision.
Chinese stimulus & the Fed’s rate cutting cycle
The stimulus from China comes as the Federal Reserve cut interest rates by 50 basis points and signaled further rate cuts across the year. The market is currently pricing in a 58% probability of another 50 basis point rate cut in November under a potential 75 basis points worth of rate cuts by the end of the year. As long as the US economy remains on track for a soft landing, a lower rate cut environment is considered beneficial for Bitcoin.
BTC ETF inflows rise
Meanwhile, Bitcoin ETF flows have remained strong. Spot Bitcoin exchange-traded funds in the US recorded Net inflows of $135.95 million yesterday, marking the fourth straight day of positive inflows, which have seen funds accumulate more than 390.7 million, according to data from SoSo Value.
Delving deeper into the figures BlackRock’s IBIT the largest Bitcoin ETF led the way with inflows of $98.9 million bringing total net inflows to $21.03 billion to date
Where next for Bitcoin?
BTC/USD continues to test resistance at around the 200 SMA and 65k round number. A close over these levels could pave the way for a rally towards $70k.
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