After China’s government announced a number of measures this week to help the economy, Bitcoin was on track to have its best September ever. Traders also expect the Federal Reserve to cut interest rates again this year.
Bloomberg says that Bitcoin BTCUSD -1.95% is up 12.3% so far this month as of Friday. It is on track to have its best September since it was first introduced in 2009 and its best month since May of this year, when it rose 14.2%.
The biggest cryptocurrency in the world by market value was up 58% so far in 2024, but it was still only 10% below its all-time high of $73,798 set in March.
Tuesday, China revealed a flurry of stimulus measures to help the world’s second-largest economy and its struggling housing and stock markets. These measures include lowering short-term interest rates and the amount of capital banks must hold in reserve, among other things.
Last month, the Federal Reserve cut interest rates for the first time in four years. This is what China is doing to help its economy. Based on the CME FedWatch tool, the odds of another 75 basis points of rate cuts by the Fed this year were almost 30%. On Friday, traders in fed-funds futures also had almost 30% odds of another 100 basis points of rate cuts in 2024. It was less than 6% a month ago.
David Kroger, senior vice president at StoneX, says that China’s stimulus plan and the possibility of more rate cuts in the U.S. would lead to more money flowing around the world, which would be good for bitcoin and other risky assets.
Also, Chinese traders are still an important part of the global crypto ecosystem, even though the country has tried to ban dealing and mining in crypto since 2021. As proof of this, data from Chainalysis shows that China’s over-the-counter crypto dealers have seen a total of $75.4 billion come in during the three quarters ending in June.
Darius Tabai, CEO of decentralised cryptocurrency Vertex, said that China’s stimulus plan could give some Asian small traders and investors their confidence back. This is especially true for investors with assets in China. Tabai said that buyers still want to know more about China’s stimulus plan.
Along with bitcoin, smaller coins like Tron and VeChain that have ties to China could also do well, Kroger said in a call. Justin Sun, an entrepreneur who was born in China, started Tron. Sunny Lu, who used to be the chief information officer for Louis Vuitton China, started VeChain.
