Recently, China has announced a series of large-scale stimulus packages to revive its slowing economy. While these incentives have caused significant fluctuations in global financial markets, the reaction of the cryptocurrency market to these developments has been a matter of curiosity. Analysts offered various opinions on how Bitcoin (BTC) and altcoins were affected by these incentives and what might happen in the future.
Details of China's Incentive Package
The People's Bank of China (PBOC) lowered the reserve requirement ratio for the country's banks by 50 basis points, boosting banks' liquidity. It also cut the seven-day reverse repo rate by 20 basis points to 1.5%. The reduction of the minimum down payment rate for housing loans to 15% was another important step aimed at reviving the real estate sector. The Ministry of Finance (MOF) plans to issue 2 trillion yuan (approximately $284 billion) worth of private government bonds, aiming to support consumption and economic growth.
**Reaction of Bitcoin and Crypto Market
Despite these comprehensive incentives, Bitcoin's price has not seen a serious acceleration in the short term. Bitcoin's lack of immediate reaction to the stimulus package caught the attention of experts. “Bitcoin's lack of reaction to this news in China shows that it is more closely tied to US Federal Reserve policies and US markets,” said Rick Maeda, an analyst at Singapore-based Presto Research. This led to comments that Bitcoin may be more sensitive to economic policies and market dynamics, especially in the US, rather than global liquidity flows. However, Bitcoin's subsequent rise suggested that the effects of China's stimulus package were also beneficial.
Movement in Altcoins and the China Effect
After the stimulus news, investors increased their interest in China-based cryptocurrencies. In particular, projects such as Conflux (CFX) and Phoenix Global (PHB) recorded significant rises, diverging positively from the overall market. This shows that investors are turning to projects characterized as “Chinese beta”. However, analysts are cautious about whether this activity is a permanent trend, noting that the market may be in search of a new narrative.
Analyst Opinions and Future Expectations
Analysts at QCP Capital suggested that China's strong policy actions indicate that global easing policies will continue and will provide strong support to asset prices in the short term. It was also noteworthy that Ethereum experienced a larger increase compared to Bitcoin. The ETH/BTC pair rose from 0.038 to 0.0415 in a short period of time. Changes in favor of Ethereum were also observed in the options market.
On the other hand, Bitcoin's positive correlation with the balance sheet of the People's Bank of China is also noteworthy. Analysts argue that the growth in PBOC's balance sheet could indirectly boost Bitcoin prices in the long run.
Influence of US and Global Markets
Bitcoin's limited reaction to Chinese stimulus has once again demonstrated its dependence on US markets. Singapore-based Presto Research analyst Rick Maeda noted that BTC has shown the highest correlation with US stocks for two years. On the other hand, US Vice President Kamala Harris' announcement that she would support the cryptocurrency sector was considered as positive news for the markets.
Conclusion and Evaluation
While China's comprehensive stimulus packages have created a positive atmosphere in traditional markets, the cryptocurrency market's reaction to these developments is characterized as relatively limited. Bitcoin is said to be more dependent on US economic policies and market dynamics rather than global liquidity flows. However, the activity seen in altcoins, especially in China-based projects, shows that investors are looking for new opportunities.
Again, according to experts, the impact of China's economic incentives on cryptocurrency markets may become more pronounced in the future. In particular, the growth in the PBOC's balance sheet and the revival of the Chinese economy could create a positive environment for Bitcoin and other cryptocurrencies in the long run.
