- PBOC cuts rates, trims mortgage costs.
- Trade talks between US and China scheduled.
- Markets await FOMC guidance on policy shift.
Bitcoin surged past $97,000 on Wednesday before settling above $96,000, as a confluence of global monetary moves stirred markets ahead of the Federal Reserve’s policy announcement.
The cryptocurrency’s rally came hours after China injected $138 billion into its economy through a broad stimulus package and the US central bank made back-to-back Treasury purchases totalling $34.8 billion.
These developments, combined with renewed China-US trade talks, have raised speculation of a return to quantitative easing, shifting global investor sentiment towards risk-on assets like crypto.
China injects liquidity and cuts interest rates
At a press conference hosted by the State Council Information Office, People’s Bank of China Governor Pan Gongsheng announced a 0.5 percentage point cut in the reserve requirement ratio (RRR), freeing up 1 trillion yuan (~$138 billion) in long-term liquidity.
This measure was paired with a 10 basis point cut to the key policy interest rate and a reduction in the seven-day reverse repo rate from 1.5% to 1.4%.
The stimulus package also included a 500 billion yuan re-lending facility aimed at supporting elderly care and domestic consumption.
In addition, mortgage rates were trimmed and reserve requirements for auto financing companies were eased.
These steps are intended to counter weakening domestic demand and support the slowing property sector.
The timing of the announcement was critical. It came just before the US confirmed that Treasury Secretary Scott Bessent would meet Chinese Vice Premier He Lifeng in Switzerland on May 10 and 11.
The upcoming summit marks the first official trade talks since President Trump raised tariffs on Chinese imports to 145%.
Bitcoin and S&P 500 react to global easing signals
Markets responded immediately to the dual headlines of stimulus and diplomacy.
According to The Kobeissi Letter, S&P 500 futures climbed more than 1%, while Bitcoin jumped above $97,000.
The cryptocurrency’s gains were tempered later in the day, with BTC trading at $96,911 at the time of writing, up 2.93% in the past 24 hours.
Source: CoinMarketCap
Gold also rallied strongly, nearing all-time highs at $3,437.60 per ounce, showing a 28.84% year-to-date increase.
The precious metal’s gains suggest investors are positioning for uncertainty ahead of the Federal Reserve’s Federal Open Market Committee (FOMC) statement.
Fed’s bond purchases trigger QE speculation
Adding to the market momentum, the Federal Reserve quietly purchased $34.8 billion in Treasury securities across two days. On May 5, it acquired $20 billion in 3-year notes, followed by a $14.8 billion buy in 10-year bonds on May 6.
These moves were made without any formal announcement of a policy shift.
The scale and speed of the purchases have fuelled speculation that the Fed is testing the waters for a return to quantitative easing.
This follows months of cautious guidance from Chair Jerome Powell, who had maintained that further tightening or balance sheet reductions were possible depending on inflation trends.
Arthur Hayes, former BitMEX CEO, suggested in a recent column that these actions could propel Bitcoin to $250,000 by the end of 2025, should QE formally resume.
However, other analysts remain sceptical, noting the absence of systemic financial stress that would typically justify such action.
Eyes on the Fed as markets wait for clarity
The FOMC meeting later today will be closely watched for signals on the Fed’s policy stance.
A dovish pivot could help Bitcoin establish stronger support above $97,000, while a more hawkish tone may lead to increased volatility.
Investors remain cautious but alert, with global central bank coordination and renewed trade diplomacy hinting at deeper macro shifts.
Whether Bitcoin maintains its upward trajectory depends largely on what message the Fed sends in the coming hours.
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