This week, the People’s Bank of China (PBOC) unexpectedly lowered short-term policy and benchmark lending rates, causing a surprise in the market. This move by the central bank has far-reaching implications, including in the cryptocurrency field. Some industry professionals and traders believe that China’s interest rate cut is a prelude, with Bitcoin expected to hit a new all-time high before September. The unexpected rate cut in China has been seen as a catalyst for the rise in Bitcoin prices, which touched $68,000. The recent fluctuations in Bitcoin prices, especially after President Joe Biden announced he would not seek re-election, have led to some liquidation of futures contracts worth $1.59 billion. However, Bitcoin’s price quickly rebounded to $68,000, with some attributing this to investments flowing back into Bitcoin following Biden’s announcement. The rate cuts by the central bank, reducing the 7-day reverse repurchase rate from 1.8% to 1.7%, the one-year loan prime rate (LPR) from 3.45% to 3.35%, and the five-year LPR from 3.95% to 3.85%, were made after GDP growth in the second quarter was lower than expected at 4.7%. This decision aims to address weak consumption demand and deflationary pressure, particularly in the real estate sector, which continues to face financial difficulties. Global interest rate cuts have always been closely watched, especially when it comes to the impact of rate cuts by the world’s second-largest economy like China. The sudden interest rate cut by the People’s Bank of China, seen by some industry insiders as a boost for Bitcoin’s continued upward trend, contrasts with the United States’ decision not to cut rates, leaving the future trajectory of Bitcoin open for observation. However, globally, cryptocurrency investors are more hopeful for a rate cut response from the Federal Reserve. The lower interest rates are a key factor in the performance of risk assets, including cryptocurrencies, as they are mostly pegged to the US dollar. The decision by the Federal Reserve, expected to be announced after the July 31st meeting of the Federal Open Market Committee, is eagerly awaited by investors worldwide. Should the Federal Reserve cut rates in September or by the end of July, it would lower borrowing costs and stimulate investors to increase investments in higher-risk assets, with Bitcoin being a significant choice. A rate cut by the Federal Reserve would weaken the value of the US dollar, potentially increasing the value of cryptocurrencies like Bitcoin. As digital currencies like Bitcoin are often seen as a hedge against inflation, expectations of rising inflation could further boost the value of Bitcoin and other digital currencies. In addition to the Federal Reserve’s decision, another factor worth noting is Ethereum. The Ethereum spot trading fund on the US Ethereum exchange will start trading on July 23, and its debut is expected to enhance the positive momentum of Bitcoin, potentially reaching monthly highs. Analysts believe that if this trend continues, the price of Bitcoin could surpass $70,000. The road ahead for Bitcoin may not see parabolic acceleration and growth, but positive ETF inflows are expected to sustain the rebound longer than previously anticipated. In conclusion, the interest rate cuts by both the Federal Reserve and the People’s Bank of China are expected to impact the cryptocurrency market, with positive prospects for the future. Countries worldwide are closely watching the interest rate cuts, forming a global interconnected financial system. The pressure is now on the United States to see if the Federal Reserve will cut rates, when it will happen, and by how much. The future of Bitcoin and other cryptocurrencies remains bright, with many factors influencing their value, including inflation expectations, regulatory developments, and economic policies.
