China’s recent stimulus measures have sparked optimism in global financial markets, and according to QCP Capital analysts, the effects could soon extend to the crypto space.
While stock indices have responded positively to China’s economic policies, the cryptocurrency market has yet to see a similar surge. However, QCP Capital believes that the next phase of stimulus from the Chinese central bank could fuel bullish sentiment in risk assets, including cryptocurrencies.
Cryptocurrency Market Potential to Rise
in mail QCP Capital, in a report published earlier today on its Telegram channel, noted that the People’s Bank of China is expected to roll out additional stimulus, which, combined with easing from other major central banks, could inject more liquidity into global markets.
Despite the slow upward momentum in the cryptocurrency market, with Bitcoin still hovering just above $63,000, QCP Capital analysts predict that the cryptocurrency’s price rally could surprise many investors.
They emphasized the “explosive” nature of cryptocurrency price movements and how many may be caught off guard and thrown off course by a potential rally driven by various bullish catalysts. The company wrote:
While there is currently a lack of distinct crypto factors driving prices, the stars are aligning in the macro environment, which could push crypto prices higher. We know how explosive crypto prices have been, and with so many bullish catalysts in place, we believe the next move higher will leave many people amazed and ignorant.
The yield differential indicates optimism about risky assets.
The QCP Capital report also highlighted an important macroeconomic indicator: the widening spread between 2-year and 10-year US Treasury yields.
This yield differential, which has risen by about 40 basis points over the past month to 21 basis points, indicates “potential optimism” about economic growth, according to QCP analysts.
Rising yield differentials typically indicate a favorable environment for risk assets such as stocks and cryptocurrencies in the medium to long term. Moreover, China’s comprehensive policies to rejuvenate its housing and equity markets have already yielded positive results.
QCP Reveals For example, the SSE Composite Index rose 4.15% yesterday, reflecting investor confidence in the country’s recovery. If the effects of China’s stimulus measures spill over to the cryptocurrency market, this could accelerate a bullish phase for Bitcoin and other digital assets.
Speaking of Bitcoin, the asset has been steadily rising and falling below and above the $63,000 level. After seeing a surprise surge above $64,000 in the wake of the US Federal Reserve’s interest rate cut, the asset seems to have slowed down its advance, with the price now trading at $63,738, up just 1.1%.
Featured image created using DALL-E, chart from TradingView