Bitcoin stabilizes near $38.5k on Tuesday after the Reserve Bank of Australia announced the termination of its easing program. The quantitative easing (QE) program, also called the liquidity-boosting bond purchase program, tamed rate hike fears.
The RBA’s decision to end the QE program followed the US Federal Reserve’s lead on ending QE. Last Wednesday, the Fed reemphasized its commitment to end its bond purchases in March and set the stage for a rate hike in the same month.
Though the RBA move followed the Fed’s lead, the RBA pushed back against rate hike expectations. According to Governor Philip Lowe in a statement,
“Ceasing purchases under the bond purchase program does not imply a near-term increase in interest rates. The board is prepared to be patient as it monitors how the various factors affecting inflation in Australia evolve.”
Though this announcement weighed over the Australian dollar, sending AUD/USD down 50 percentage points (pips) towards 0.70, it perhaps helped Bitcoin stabilizes after it, as well as other risk assets, add overnight gains.
For instance, BTC is largely unchanged, staying near $38,560 at 04:55 UTC, having jumped 1.5% on Monday. Aussies benchmark equity index, S&P ASX 200, traded 0.5% higher, while the futures tied to the S&P 500 futures dropped 0.2%.
BTC had dropped by almost half since peaking near $69,000 on Nov. 10, predominantly due to fears of faster Fed tightening. The sensitivity to stock market gyrations and macro factors like central bank decisions perhaps stems from increased institutional participation. Besides, BTC has been one of the inflation trades.
Despite the recent rise in price, some crypto analysts remain skeptical because macroeconomic and regulatory risks remain elevated. According to Marcus Sotiriou, an analyst at the U.K.-based digital asset broker GlobalBlock,
“Regulation concerns arise as the Biden administration prepares to release an executive order in February to regulate bitcoin as a matter of national security. It is hard to predict whether this executive order will have a positive or negative impact on the industry.”
Alex Kuptsikevich, another crypto analyst wrote,
“The situation in the crypto market remains very fragile. Bitcoin could end up falling for the third month in a row.”