Bitcoin Stable Amid China’s Weakening Economy

BEIJING June 20, 2023 – Bitcoin (BTC) exhibited little movement on Tuesday despite China’s decision to cut its benchmark lending rates for the first time in ten months. The People’s Bank of China (PBOC) announced a reduction of ten basis points (bps) in one-year and five-year loan prime rates, bringing them down by 3.55% and 4.3%, respectively. 

However, these looser monetary conditions stand in stark contrast to the ongoing monetary policy tightening in Western economies. Recent economic reports from Bloomberg and Reuters [1][2][3] have shown that China, the world’s second-largest economy, is losing momentum and is on the verge of deflation. 

Despite the rate cuts, bitcoin – known for its correlation with liquidity – remained unphased. The world’s leading digital currency by market cap hovered around $26,819 at 7:27 UTC and rose to $27,150 during Asian trading hours, according to data from CoinGecko.

Though bitcoin does not have a clear upward trajectory at press time, this risk-off sentiment among investors suggests a lack of confidence that the rate cuts alone will revive the slowing Chinese economy. Despite the global economic turmoil, market participants still view bitcoin as a safe haven over traditional currencies and treasury bonds.