China’s recent stimulus measures have sparked optimism in the global financial markets, and according to QCP Capital analysts, the effects may soon extend to the cryptocurrency space.
While stock indices responded positively to China’s economic policies, the crypto market has yet to see a similar surge. However, QCP Capital believes the next phase of stimulus from China’s central bank could fuel bullish sentiment in risk assets, including crypto.
Potential For Crypto Market Upsurge
In a post uploaded earlier today on its Telegram channel, QCP Capital noted that the People’s Bank of China (PBoC) is expected to roll out additional stimulus, which, combined with easing from other major central banks, could inject more liquidity into global markets.
Despite the sluggish upward momentum in the cryptocurrency market, with Bitcoin still hovering just above $63,000, QCP Capital analysts predict that a surge in digital currency prices may catch many investors off guard.
They emphasized the “explosive” nature of crypto price movements and how many might be surprised and sidelined by a potential rally driven by various bullish catalysts. The firm wrote:
While there is currently a lack of idiosyncratic crypto factors driving prices, the stars are aligning in the macro environment, which could drive crypto prices higher. We know how explosive crypto prices can be, and with so many bullish catalysts, we think the next move higher will leave many people surprised and sidelined.
Yield Spread Suggests Optimism For Risk Assets
The QCP Capital report further highlighted an important macroeconomic indicator: the widening spread between the yields of 2-year and 10-year US Treasury notes.
This yield spread, which has grown by 40 basis points over the past month to 21 basis points, signals “potential optimism” about economic growth, according to the QCP analysts.
A widening yield spread typically suggests a favorable environment for risk assets like stocks and cryptocurrencies in the medium to long term. In addition, China’s comprehensive policies to rejuvenate its housing and equity markets have already driven positive results.
QCP reveals that the SSE Composite Index, for example, saw an increase of 4.15% yesterday, reflecting investor confidence in the country’s recovery. If the effects of China’s stimulus measures spread to the crypto market, this could accelerate a bullish phase for Bitcoin and other digital assets.
Speaking of Bitcoin, the asset has consistently risen and fallen below and above the $63,000 mark. After seeing a sudden spike above $64,000 following the US fed rate cut, the asset appears to have seen a cool-off in the rally, with price now trading at $63,738, up by a mere 1.1%
Featured image created with DALL-E, Chart from TradingView