Bitcoin (BTC) pumped to the $97,000 price level yet again before retracing to the $96,000 level. This surge in the price of BTC on Wednesday May 7, comes as the market reacts to a liquidity-bolstering announcement by China. Additionally, official confirmation of the tariff talks between China and the U.S has emerged reigniting risk-on assets sentiment further. 

However, all these come just hours before the crucial FOMC (Federal Open Market Committee) meeting set to happen today. It is crucial to note that the decisions stemming from the FOMC meeting are set to stir the crypto market and could potentially halt BTC’s rally to $100K. 

China’s PBOC Fuels Risk-on Sentiment with $138B in Long-Term Liquidity

As the crypto market awaits the FOMC meeting nervously, on the other end of the world, China announced reserve requirement ratio and interest rate cuts earlier on Wednesday. The announcement was made by Governor Pan Gongsheng of the People’s Bank of China (PBOC) in a press conference hosted by the State Council Information Office. 

According to local news, the PBOC will cut the reserve requirement ratio by 0.5% points. This will allow the bank to provide 1 trillion yuan of long-term liquidity. The PBOC is also set to reduce policy interest rates by 0.1% points. 

As per Gongsheng, China will cut the seven-day reverse repurchase rates to 1.4% from 1.5%. The move will thus bring the loan prime rate down by around 10 basis points. Furthermore, the move matters for the crypto market since it will influence the global capital flows. 

Increased liquidity stemming from China’s decision to cut reserve requirement ratio and lower policy interest rates will fuel risk-on sentiment. This will further prompt investors to seek higher returns in cryptocurrencies like Bitcoin.

Bessent Confirms China and U.S Tariff Talks

China’s move to boost long-term liquidity was preceded by a confirmation of the U.S and China tariff talks. Earlier, Scott Bessent – the US Treasury Secretary, confirmed that he would be meeting Chinese Vice Premier He Lifeng to discuss a potential fair trade deal. The meeting will happen on May 10 and 11 in Switzerland. 

“The world has been coming to the US, and China has been the missing piece—we will meet on Saturday and Sunday to discuss our shared interests,” Bessent wrote on X. He further added that “the current tariffs and trade barriers are unsustainable, but we don’t want to decouple…What (U.S) want is fair trade.” 

This confirmation has further added to the risk-on sentiment. Bitcoin and the general crypto market suffered huge losses recently due to trade tariff war between the U.S and China. However, with the first official trade talks between the two global giants on the horizon, the crypto market could boom as macro-clarity kicks in. 

BTC Flirts with $97,000 Hovering Above the Ichimoku Cloud

Bitcoin (BTC) has been flirting with the $97,000 level. The price rose to this level earlier today before rebounding to $96,000. However, several attempts to climb to this level have occurred with continued retrace every time. As of now, the BTC/USDT 4 hour chart on TradingView shows that the crypto king is trading at $96,918. 

The current price of Bitcoin shows a rebound from the support trendline of the ascending broadening wedge pattern and is currently trading above the Ichimoku Cloud. This level is currently acting as the support ahead of the FOMC. 

If the price continues to hold above the cloud, it could lead to further upward movement. However, it’s crucial for investors to monitor the price action closely for confirmation of sustained bullish momentum. 

Nonetheless, Bitcoin’s rally to $100,000 lies at the mercy of the FOMC decision. If the Federal Reserve (Fed) led by Jerome Powell gives a hawkish stance (interest rate hike) – which is unlikely, then the crypto market including BTC will suffer a dip. 

However, a dovish stance like an interest rate cut, on the other hand, will drive the price of cryptocurrencies higher. Hence, there will be room a Bitcoin rally to the psychological $100K level. This level is a pivotal liquidity magnet and thus all eyes are now on the FOMC meeting.