As the global economic situation changes, China has decided to implement large-scale stimulus measures to cope with the challenges of the domestic economic slowdown. It is said that the People's Bank of China (PBoC) is formulating a fiscal stimulus plan of RMB 1 trillion to boost the economy and restore market confidence. This news not only brought hope to the Chinese market, but also triggered a positive reaction in the global financial market.
According to the latest reports, the Chinese government, under the guidance of the highest level, is actively formulating a series of fiscal stimulus measures to support economic growth and prevent a further decline in the real estate market. China has pledged to promote the 5% economic growth target by 2024 and has asked the Ministry of Finance to cooperate with relevant agencies.
In this context, the People's Bank of China has made an easing decision to lower the deposit reserve ratio (RRR) of mainland banks by 50 basis points and reduce the 7-day reverse repurchase operation rate from the current 1.7% to 1.5%, while guiding the LPR and deposit rates to decline simultaneously to increase market liquidity and consumption capacity. At the same time, China's fiscal policy will also include issuing special sovereign debt, supporting consumption, and providing employment subsidies and tax and fee reductions for small and medium-sized enterprises. The implementation of these policies is expected to inject additional liquidity into the economy in the coming months.
In addition, China is considering injecting up to 1 trillion yuan (about 142 billion U.S. dollars) of capital into state-owned banks to improve their ability to support the troubled economy and provide more financing for economic development. If realized, it will be the first time China has injected capital into large banks since the global financial crisis in 2008. People familiar with the matter revealed that the funds will mainly come from the issuance of special government bonds, but the details have not yet been finalized and may change.
It is worth noting that not only China, but also central banks around the world are considering interest rate cuts and other easing measures. The Federal Reserve's monetary policy trends have attracted much attention, and the recent interest rate cut decision of the Federal Reserve (Fed) has injected new vitality into the market. Although some officials have not commented on specific policies, overall economic data show that the US economy is heading for a "soft landing." For example, the number of unemployment benefit applications in the United States recently fell to a four-month low, corporate profit growth exceeded expectations, and gross domestic product (GDP) growth also showed positive signals.
Overnight, China joined almost all other major global economies in easing monetary policy to counter the economic slowdown. With the tailwind of the impending global monetary easing cycle, the stock and cryptocurrency markets rose across the board. The S&P500 index has hit 42 new record highs this year, gold has once again approached the $2,700 mark, and the Chinese stock market has rushed straight to 3,000 points. In addition, cryptocurrencies have also seen a general rise, with Bitcoin standing at 65K, and the top ten cryptocurrencies by market value rising at the same time. This phenomenon shows that the market's optimism for risky assets is rising.
According to research by cryptocurrency analysts, there is a strong positive correlation between global liquidity and Bitcoin price. The current economic environment has led to rising investor demand for high-risk assets. Especially in a low interest rate environment, the appeal of digital assets has significantly increased. In particular, Bitcoin and Ethereum ETFs (exchange-traded funds) have been enthusiastically sought after in the market recently, reflecting the market's growing acceptance and demand for digital assets.
The improvement in the macroeconomic environment will provide support for cryptocurrencies and other risky assets. Although there are no specific factors that can drive a sharp rise in cryptocurrency prices at present, in the long run, the improvement in macroeconomic conditions will likely drive their prices higher. In addition, against the backdrop of global economic recovery and policy easing, bullish sentiment in the cryptocurrency market is rising rapidly. Many investors believe that as liquidity continues to increase, cryptocurrency prices are likely to continue to rise in the long run and continue to break new highs.
Global investor sentiment is changing significantly. As economic stimulus measures and interest rate cuts continue to be implemented in China and other parts of the world, positive sentiment in the cryptocurrency market is gradually replacing the previous cautious attitude. Analysts believe this shift in sentiment could lead to greater capital inflows into the cryptocurrency market, driving prices even higher.
In this context, many investors have begun to re-evaluate their portfolios and increase their allocation to cryptocurrencies. Many industry experts predict that in the short term, if the price of Bitcoin can continue to stay above $65,000, it may even move towards the target of $70,000.
In general, China's massive fiscal stimulus measures combined with the loose policies of global central banks have injected strong momentum into the current stock and cryptocurrency markets. Driven by policies, both markets have shown strong upward momentum, which makes people look forward to future market performance. In this era full of opportunities and challenges, investors need to respond flexibly and seize every possible opportunity to welcome the rise and prosperity of cryptocurrencies.
