Bitcoin Surges Above $97,000 Amid Global Monetary Movements
Bitcoin experienced a significant rally on Wednesday, surpassing $97,000 before stabilizing above $96,000. This surge was propelled by notable global monetary activities just prior to the Federal Reserve’s policy announcement.
China Injects $138 Billion Into Economy
During a press conference held by the State Council Information Office, Pan Gongsheng, the governor of the People’s Bank of China, announced a 0.5 percentage point cut in the reserve requirement ratio (RRR). This action released approximately 1 trillion yuan (around $138 billion) in long-term liquidity.
Accompanying this reduction was a 10 basis point decrease in the benchmark interest rate and a cut in the seven-day reverse repurchase agreement rate from 1.5% to 1.4%. The stimulus plan also included a 500 billion yuan refinancing facility aimed at supporting elderly care and domestic consumption.
Moreover, mortgage rates were lowered, and reserve requirements for auto financing companies were eased. These measures are intended to counter waning domestic demand and to support the cooling real estate sector.
Market Reactions to Global Policies
The announcement’s timing was critical, coinciding with the United States’ confirmation that Treasury Secretary Scott Bessent would meet with Chinese Vice Premier He Lifeng in Switzerland on May 10 and 11. This forthcoming summit will mark the first official trade negotiations since President Trump imposed tariffs on Chinese imports, raising rates to 145%.
Market reactions to these developments were swift. According to The Kobeissi Letter, S&P 500 futures climbed over 1%, while Bitcoin surged, momentarily eclipsing $97,000. However, as of this report, Bitcoin was trading at approximately $96,911, reflecting a 2.93% increase in the last 24 hours.
Gold also saw a notable rise, nearing historical highs at $3,437.60 per ounce, marking a 28.84% increase year-to-date. Such gains suggest that investors are positioning themselves for potential uncertainties ahead of the Federal Open Market Committee’s (FOMC) statement.
Federal Reserve’s Bond Purchases Spark Speculation
Adding to market momentum, the Federal Reserve discreetly purchased $34.8 billion in Treasury securities over two days. On May 5, it acquired $20 billion in three-year notes, followed by a $14.8 billion purchase of ten-year notes on May 6.
These activities were conducted without any official announcement regarding a shift in policy, leading to speculation that the Fed may be testing the waters for a return to quantitative easing (QE).
Arthur Hayes, former CEO of BitMEX, suggested in a recent commentary that such actions could propel Bitcoin to $250,000 by the end of 2025, contingent upon an official return to QE. Conversely, other analysts expressed skepticism, citing a lack of systemic financial stress typically warranting such drastic measures.
Investors Await Federal Reserve Clarity
As markets anticipate the upcoming FOMC meeting later today, all eyes are on the Fed for signals regarding its policy direction. A dovish pivot could reinforce stronger support for Bitcoin above $97,000, while a more hawkish tone might trigger heightened volatility.
Investors are remaining cautious yet vigilant, with the coordination of global central banks and renewed trade diplomacy hinting at more profound macroeconomic changes. The trajectory of Bitcoin’s performance will largely depend on the message delivered by the Fed in the coming hours.
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