China’s weak economic performance might prompt the country’s central bank to implement stimulus measures, according to Bloomberg. This could enhance global liquidity and support the altcoin market’s rise to new all-time highs.
A March study by 21Shares revealed a 94% correlation between Bitcoin’s price and global liquidity, a figure surpassing that of the S&P 500 index and gold.
On August 21, China reported a 0.1% decline in retail sales in July compared to June. Fixed asset investments fell by 5.3% year-on-year, marking the sharpest decline since March 2020. Industrial production grew by only 0.4%, while urban unemployment reached 5.2%.
Analysts at Bloomberg Economics believe the People’s Bank of China (PBOC) might introduce stimulus measures as early as September. Economists from Nomura and Commerzbank also consider an announcement of economic support to be imminent.
Despite recession fears, markets remain resilient. A survey by the University of Michigan showed that 60% of Americans expect unemployment to rise next year. However, the S&P 500 index closed at a new all-time high, and the yield on five-year U.S. Treasury bonds increased from 3.74% to 3.83%.
The rise in government bond yields indicates a decrease in risk aversion among traders. This creates room for the capitalization of altcoins to grow.
If the PBOC takes more active measures, the additional liquidity could act as a catalyst for capital inflows into riskier assets. In such a scenario, China’s stimulus could push cryptocurrencies to new all-time highs.
According to a forecast by Coinbase Institutional, current market conditions could trigger an altseason in September.