PBOC pause shifts focus to yuan and crypto mining costs
China left the loan prime rate unchanged for a fifth month – 1-year at 3.0%, 5-year at 3.5% – a cautious pause ahead of the Oct. 20–23 plenum and amid fresh U.S.-China trade and export-control friction.
Policymakers look reluctant to cut headline rates days before a major policy meeting. Instead, if growth data soften further, any easing is more likely to come through liquidity tools (RRR or MLF tweaks) after the plenum. That keeps bank funding stable for now while leaving room to nudge conditions looser later if needed.
For crypto, the first channel is the currency. When the People's Bank of China (PBOC) eases policy, the yuan typically weakens (USD/CNH rises). That pattern has coincided with a stronger bid for Bitcoin during Asia hours as households and traders reach for dollar-linked, offshore assets. It’s not a law of nature – headlines can swamp it – but the linkage has shown up repeatedly through 2024–2025 easing bursts.
Another link comes through hardware costs. China’s tighter rare-earth rules – with licenses that can bite even outside its borders – raise prices and lead times for the unglamorous parts of mining and data-center stacks: high-grade magnets and motors, industrial fans, power supplies, racks. ASIC supply isn’t directly affected, but capex and opex for miners can rise as cooling and power gear become more expensive.
A third channel runs through Hong Kong risk appetite. If the plenum produces stimulus-friendly signals, local equity tone and flows into crypto ETPs can firm. If tariff threats and export controls escalate, that appetite can fade just as quickly, muting creations and pushing spreads wider.
Over the next few weeks, watch for post-plenum guidance: even a small RRR cut would hint at a softer yuan and a livelier BTC hedge bid in Asian trading. Clearer rare-earth licensing rules would help markets price mining/AI-infra costs. And in Hong Kong, steadier policy messaging should translate into healthier primary-market activity for crypto ETPs; renewed trade shocks would do the opposite.
Earlier, GNcrypto reported on Bank of China Hong Kong’s 6.7% rally after local media said it’s preparing to seek a HKMA stablecoin-issuer license under the city’s new regime, with first approvals expected in early 2026 and regulators cautioning that early engagement isn’t approval. That backdrop matters here: as the PBOC holds rates and we track Hong Kong risk flows, a maturing HK stablecoin licensing pipeline could become a parallel channel shaping regional crypto liquidity and on-ramps.
Recommended