06.03.2025 11:43
China continues to support its economy with stimulus measures such as the issuance of special treasury bonds worth 300 billion yuan (approximately 41.4 billion dollars) and interest rate cuts. Analysts point out that similar expansionary policies have coincided with bullish trends in the cryptocurrency markets in the past.
China aims to boost consumption and mitigate the effects of the escalating trade war with the United States through new fiscal and monetary incentives announced on Wednesday. The central bank's measures are expected to increase global liquidity, which may spread to various risky assets, including Bitcoin. Bitcoin, which rose by 12.3% in September 2024, has recently shown one of its best September performances. Data from TradingView also confirms a positive correlation between Bitcoin prices and the balance sheet of the People's Bank of China over the past eight years. Experts suggest that China's new stimulus package of 300 billion yuan could positively impact Bitcoin by increasing global liquidity.
The Cryptocurrency Market is Following the Stimulus Policies of Major Economies
China's monetary and fiscal incentives are creating new expectations in global markets. A study conducted by S&P Global found that both bullish and bearish trends in the cryptocurrency market occurred during periods of loose monetary policy and significant tightening.
Bitcoin's rise in September mirrored China's previous stimulus efforts. The country's reduction of short-term interest rates and easing of reserve requirements for banks to support its housing and stock markets positively affected the crypto market.
A spokesperson for Nexo highlighted the potential implications of China's latest stimulus for alternative assets. The spokesperson stated, "In previous instances when China increased its monetary incentives, such as in 2015 and 2020, excess liquidity flowed into alternative assets."
The spokesperson also warned that China's strict regulatory controls limit direct participation in cryptocurrency markets. "State-backed alternatives may absorb some of the liquidity or capital may flow into traditional safe-haven assets like gold," they stated.
China's annual government work report outlined a GDP growth target of 5%, a fiscal deficit target of 4% of GDP, and a focus on increasing private consumption through various measures.
Nansen's Chief Research Analyst Aurelie Barthere commented, "China remains in a slow positive economic momentum, not an explosion." Barthere noted that despite positive signals regarding artificial intelligence investments from the central government, developments in China do not carry as much weight for cryptocurrency markets as changes in U.S. policy.
The trade war initiated by U.S. President Donald Trump continues to threaten China's industrial sector. This challenge is exacerbated by weak domestic consumption and a deteriorating, debt-laden real estate market, making the Chinese economy increasingly vulnerable.
André Dragosch, Head of Research at Bitwise Europe, stated that Bitcoin's performance is primarily dominated by global growth expectations. Dragosch noted, "These expectations have been repriced downward recently due to increasing tariff uncertainty."