Key Points
- China’s major economic stimulus could significantly boost Bitcoin’s value.
- Bitcoin’s performance is still linked to global liquidity and changes in risk appetite.
The largest cryptocurrency in the world, Bitcoin, may experience a significant surge following China’s recent announcement of a major economic stimulus. The People’s Bank of China (PBoC) recently unveiled its largest stimulus package since the pandemic began, aimed at rescuing the country’s economy from deflation and promoting further growth.
The PBoC plans to inject $140 billion of liquidity into the economy and reduce the reserve requirement ratio by 50 basis points. The bank has also decided to ease property purchases and lower borrowing costs to bolster the economy, which has been grappling with low demand in the real estate market and weak credit demand from businesses and consumers.
Impact on Bitcoin
Jamie Coutts, the chief crypto analyst at investment management firm Real Vision, believes that China’s recent stimulus package could be beneficial for Bitcoin, and may also prompt other central banks to reduce rates. Despite China’s ban on Bitcoin in 2021, Coutts argues that Bitcoin’s performance is still tied to global liquidity, and China’s easing measures could result in broader changes in risk appetite.
Following a rate cut by the Fed in September, Bitcoin’s price quickly rose to $64,000. The technical chart indicates that Bitcoin is showing strength and could potentially hit a new all-time high soon. Bitcoin’s long-term chart is currently forming a bull-flag pattern, suggesting that it could potentially break out above $78,000, a new all-time high.
