Bitcoin and ETH slip in ‘Asian Bearish Session’ as China cuts rates

Bitcoin saw most of its year-to-date gains during U.S. trading hours.

Bitcoin Performance Asia, Europe and America Time in 2021 | Source: Fredrick Collins

Bitcoin and ETH are trading lower again in Asia, continuing a year-long downtrend that mainly occurred during the sleep of the US. The decline came as traditional markets turned a blind eye to China’s rate cut and remained risk averse.

At press time, BTC is trading at $ 48,473, up nearly 5% from the day after falling to the $ 46,000 region yesterday. ETH, on the other hand, is close to $ 4,004, also nearly 5% up on the day.

Bitcoin and ETH will continue to be under selling pressure during Asian trading hours in 2021, according to data from options trader Fredrick Collins. Most profits from BTC and ETH (60% respectively, 8:00 a.m. to 6:00 p.m. New York time (8:00 p.m. to 6:00 a.m. local time)

ETH price development in Asia, Europe and America in 2021 | Source: Fredrick Collins

Both of the leading cryptocurrencies have slumped in the past few weeks, dragging most of the market down as the US Federal Reserve (Fed) and other major central banks begin to reverse the measure.

Bitcoin has lost more than 30% in value since its peak near $ 69,000 on November 10, and sellers dominate the market during Asian trading hours – 8 a.m. to 6 p.m. Beijing time (7 a.m. to 5 p.m. Synthetic Teamese time).

Bitcoin sell-off recently mainly in Asia | Source: Fredrick Collins

That trend continued on Monday, despite the fact that the People’s Bank of China (PBOC) took steps to bail out the economy from the negative impact of the real estate market and concerns about the novel coronavirus.

China’s central bank announced a cut in the key interest rate for one-year loans from 3.85% to 3.8%, confirming the first cut in almost two years.

Interest rate cuts tend to add liquidity to the economy. As a result, inflation-hedging assets like bitcoin, gold, and asset prices generally respond positively to rate cuts.

Right now, however, Asian stocks are flashing red, along with futures on the S&P 500 declining 1.1%, oil prices have fallen more than 3%, and hedging currencies like the Japanese yen are becoming safe havens.

Market movements suggest that China’s rate cut is unlikely to have the impact the Fed and other central banks are about to tighten monetary policy. Last week the Fed announced three rate hikes in 2022 and the Bank of England announced a surprise rate hike.

Rising concerns about quarantines due to the novel coronavirus also appear to be overshadowing Beijing’s drive to improve market sentiment. European countries are again introducing stricter measures to prevent the spread of Omicron, and China’s “No Covid” policy threatens to disrupt global supply chains.

Jim Bianco – also President of Bianco Research tweets on this matter:

“While China’s chart shows ‘only’ 136 cases of Covid, that was historic enough to stop all activity and force people to stay inside.”

The source: Jim Bianco

Isolation measures and interruptions in the supply chain are causing inflation, which is seen as a beneficial development for Bitcoin. Meanwhile, social isolation has severely affected economic growth.

However, given mounting global price pressures, central banks are unlikely to be able to pump more liquidity to prioritize growth, as they did after the first wave of COVID in first half of 2020. At the time, US inflation was below the Fed’s 2% target. In November, inflation in the world’s largest country hit a four-year high of 6.8%.

Fed Chairman Jerome Powell recently removed the word “temporarily” from inflation discussions, signaling a shift in focus from jobs (growth) to inflation control. In addition, the International Monetary Fund urged the Fed to accelerate monetary tightening to contain inflation.

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