As a seasoned crypto investor with over a decade of experience navigating market fluctuations, I find myself intrigued by China’s recent economic stimulus package announcement. Having witnessed numerous bull and bear markets, I can attest that central bank actions often play a significant role in shaping the crypto landscape.
As an analyst, I’m excited about the potential surge in value for Bitcoin (BTC) following China’s recent announcement of economic stimulus. On September 24, the People’s Bank of China unveiled its most substantial stimulus package since the pandemic, aimed at reviving the nation’s economy from deflation and fostering additional growth.
As a researcher, I’d rephrase it like this: In my role as an observer, I note that the People’s Bank of China (PBoC) has declared its intention to inject approximately $140 billion into the economy to maintain liquidity. Additionally, they plan to lower the Reserve Requirement Ratio (RRR) by 50 basis points, a move aimed at increasing the availability of funds for lending and stimulating economic activity.
Furthermore, the People’s Bank of China relaxed property buying regulations and reduced borrowing rates to bolster their economy. Over the last few months, China has faced a slump in its real estate sector due to low consumer demand. Additionally, weak credit appetite among businesses and consumers necessitated swift action from the bank.
As a crypto investor, I’m closely observing the economic landscape, and the recent PBOC stimulus package announced is the largest since the pandemic began. While it’s a significant move, Julian Evans-Pritchard, an analyst at Capital Economics, points out that it might not be enough to reach this year’s growth target of around 5% on its own. He implies that more fiscal stimulus could potentially be needed to guide the economy back toward this goal.
How China’s Stimulus Package Could Be Bullish for Bitcoin
According to Jamie Coutts, the head crypto analyst at investment management company Real Vision, China’s latest economic stimulus plan is likely beneficial for Bitcoin. Furthermore, this move could potentially prompt other central banks worldwide to lower interest rates as well. In his own words:
“We’ve reached the end of the current period of global central bank liquidity provision. Other banks will likely follow suit. In our credit-based monetary system, devaluation is an inherent aspect, not a flaw.
After China’s prohibition of Bitcoin usage in 2021, the connection between Bitcoin and China’s liquidity situation has become more ambiguous. Nevertheless, as Coutts points out, Bitcoin’s performance continues to be influenced by global liquidity conditions. Any relaxation measures taken by China might trigger wider shifts in risk tolerance across various markets.
After the Federal Reserve lowered interest rates in September, the value of Bitcoin experienced rapid increases and reached an impressive peak of $64,000. Based on the technical analysis, Bitcoin appears robust and could potentially reach a new record high shortly.
The graph showing Bitcoin’s price evolution over time appears to be shaping like a bullish pennant (bull-flag pattern). As we can see on the image dated September 24, Bitcoin was nearing the upper boundary of this pennant, indicating it might soon burst through $78,000, setting a new record high.
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2024-09-24 18:06