The bitcoin and cryptocurrency market may have received another bullish narrative from China. As reported by Bloomberg, the country is considering a large stimulus package to kick-start the economic recovery after the economy was reactivated following the Corona restrictive measures.
In light of the recent opening of Hong Kong to cryptocurrency trading by retail investors, thus a new bullish narrative is emerging, noted expert Lex Moskowski explained via Twitter. According to him, Chinese incentives could go directly to “unregistered securities” (a reference to the rating of altcoins by SEC Chairman Gary Gensler).
The Chinese stimulus goes to your unregistered securities.
Here is your rising story. https://t.co/HjaB3fliC3
– Lex Moskovsky (@mskvsk) June 13, 2023
The Chinese stimulus package is being considered
According to the report, China is considering a comprehensive package of stimulus measures as pressure mounts on Xi Jinping’s government to revive its second-largest economy. Anonymous sources claim that the proposals include at least a dozen measures to support areas such as real estate and domestic demand.
It is said to focus in particular on China’s beleaguered real estate market, which is set to be a key part of the package. Chinese regulators reportedly want to lower the cost of outstanding residential mortgages and boost lending by the country’s policy banks to ensure home delivery.
In addition, interest rate cuts by the People’s Bank of China (PBOC) are also said to be under consideration. Speculation about this surfaced recently after the central bank unexpectedly cut the seven-day reverse repo rate.
However, it is important to stress that the stimulus plan is not yet finalized and therefore could be subject to change. However, China’s State Council could discuss the measures as early as Friday. However, it remains unclear when it will be announced or implemented, the report says.
What is the impact of the package on bitcoin and crypto?
While investors in the broader financial market are likely to welcome the plans of the Chinese authorities, much will depend on the eventual scope and composition of the stimulus measures to assess how much Bitcoin and cryptocurrencies will also benefit from the stimulus package.
However, the package and the recent opening of Hong Kong on June 1st is an interesting development in terms of cryptocurrency. Liberal Hong Kong is a gateway for wealthy Chinese to invest in foreign assets.
Meanwhile, the hoped-for “China effect” on the bitcoin and cryptocurrency market has yet to materialize, in part because exchange registrations are rather slow. Coinbase, for example, only received an invitation from Hong Kong lawmakers to apply in the region yesterday, as Bitcoinist mentioned.
In the US, the $1,200 stimulus check had a significant impact on Bitcoin. According to the Federal Reserve Bank of Cleveland, there is He was A “significant increase” in bitcoin purchases of $1,200 in April 2020. Furthermore, the central bank noted that overall bitcoin trading volumes increased by about 3.8% in response to the distribution of the first stimulus checks.
While the environment in China is not comparable to that in the United States, a similar effect can still occur. As NewsBTC Senior Analyst Tony “The Bull” discussed recently, Bitcoin’s best rallies always happen before major monetary stimulus.
All of Bitcoin’s best rallies were before the massive monetary stimulus
Zoom out pic.twitter.com/uR2r1zkyrG
– Tony “The Bull” (tonythebullBTC) June 4, 2023
This time, the stimulus may not come from the United States, but from China. At press time, bitcoin price stood at $26,226 ahead of today’s important CPI release in the US.
Featured image from Financial Times, chart from TradingView.com