Bitcoin More Linked With U.S. Fed, Traders Say, as China Lands Stimulus

• Bitcoin and ether are slightly down after China's central bank announced aggressive stimulus measures.
• Local equities indices rose as investors moved into stocks as a result of the measures.

Bitcoin BTC$88,122.79 started to pare weekly gains early Tuesday, falling to $62,700 after reaching a nearly one-month high of $64,500 at the start of the week as China unveiled fresh stimulus to revive a slowing economy.

The People's Bank of China (PBOC) said it was cutting the reserve requirement ratio for mainland banks by 50 basis points while also lowering the seven-day reverse repo rate – the interest rate at which a central bank borrows funds from commercial banks – by 20 basis points to 1.5%. In addition, the central bank cut the minimum down payment requirement for mortgages to 15%.

BTC fell 2.2% in the past 24 hours with other major tokens also showing losses. Ether ETH$2,977.96, BNB Chain’s BNB$849.27, XRP XRP$1.9116 and Solana’s sol SOL$125.32 lost up to 1.8%. Such drops are common after a large rally and may not be necessarily tied to China's rate decision.

"Bitcoin's lack of response to this news, juxtaposed against rallying Chinese indices, highlights that its current beta appears more tightly linked to Fed policy and U.S. markets, as evidenced by near two-year high correlations with US stocks, particularly following last week's FOMC meeting," Rick Maeda, a Singapore-based research analyst at Presto Research, wrote to CoinDesk in a note.

The broad-based CoinDesk 20 Index (CD20), a liquid fund tracking prices of the largest tokens, dropped 1.8%.

Celestia's TIA tokens were among the few gainers, adding 17% following the announcement of a $100 million fundraise in a boost to its ecosystem.

Stocks move on China cuts

While digital assets didn't respond to the Chinese rate cuts and stimulus measures, stock indices around the region were deep in the green, suggesting that local traders were more fixated on equities rather than crypto.

Hong Kong's Hang Seng index climbed 3.2% on the news, while the Shanghai Composite index added 2.3%.

In a published note, Lynn Song, chief economist for Greater China at ING, wrote that the policy package is expected to weaken the yuan slightly, with the USD-CNY exchange rate rising in response to the PBOC's easing measures. However, medium-term factors like interest-rate spreads suggest a gradual appreciation of the CNY.

Presto's Maeda says that with the PBOC hinting at further rate cuts and market support, "this decisive action comes at a critical juncture, with the [Shanghai Stock Exchange] recently dipping below the 2700 key resistance".

Harris win unlikely to be “bearish”

Elsewhere, traders at Singapore-based QCP Capital said in a Monday market broadcast that Democrat Kamala Harris becoming the next U.S. president may not be as bearish as the market assumes.

“A Harris win this election may not be as bearish as the market thinks. In another bid to win over the crypto vote, Kamala Harris vowed at a fundraiser over the weekend to help the crypto sector grow,” QCP said. “This is on top of Anthony Scaramucci and other crypto advocates working alongside her campaign's crypto policies.”

Harris said over the weekend that the party, if elected, will “encourage innovative technologies like AI and digital assets while protecting consumers and investors,” marking one of the few times the candidate has appeared warm toward the crypto sector.

UPDATE (Sept. 24 07:28 UTC): Adds quotes from Presto Reserach.