By Omkar Godbole (All times ET unless indicated otherwise)
Keeping an eye on the Far East has been our mantra lately, and the latest news from the Chinese bond market shows why. Just today, China’s one-year government bond yield dropped below 1% for the first time since the Great Financial Crisis, adding to the year-to-date downturn.
The benchmark 10-year yield slipped to 1.7%. This development highlights China’s economic struggles and suggests that the government may need to implement more aggressive stimulus measures than previously anticipated. Such actions could potentially benefit risk assets like bitcoin, which have seen volatility recently due to various factors.
However, investors should also consider the impact of declining yields on global inflation rates, particularly in countries like the US that are major trading partners with China. As China faces deflation, it may contribute to lowering core inflation in these countries, potentially affecting Federal Reserve policy decisions regarding interest rates.
In addition, investors should monitor the performance of crypto equities such as MicroStrategy (MSTR), Coinbase Global (COIN), Galaxy Digital Holdings (GLXY), MARA Holdings (MARA), Riot Platforms (RIOT), Core Scientific (CORZ), CleanSpark (CLSK), CoinShares Valkyrie Bitcoin Miners ETF (WGMI), and Semler Scientific (SMLR).
These companies are directly or indirectly involved in the crypto industry and their performances can provide insights into broader market trends. Overall, while the short-term outlook for bitcoin and other cryptocurrencies appears uncertain due to various factors, including hawkish Fed signals and overbought conditions, the long-term potential remains intact given increasing institutional adoption and global acceptance of digital assets.
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