Historical Data Says China Rally is Coming in Bitcoin: 40 Billion Step Can Fly! - Coin Bulletin

China's new stimulus measures could also have a positive impact on Bitcoin, which is seen among risky assets, by providing liquidity to global markets.

The Chinese government has decided to increase fiscal incentives to support economic growth. The ongoing trade war with the US since the beginning of the year has put pressure on the country's industrial sector, while weak domestic consumption and the debt-burdened real estate market have made the Chinese economy fragile.

In response to this situation, the government aims to stimulate consumption and prevent economic contraction by issuing special treasury bonds worth 300 billion yuan. In addition, the central bank continues to provide liquidity to the market through monetary policy by lowering interest rates and reducing bank reserve requirements.

(# How did China's previous stimulus measures affect Bitcoin?

Historically, expansive stimulus policies implemented in major economies have been associated with upward trends in cryptocurrency markets. According to a study by S&P Global, although both bull and bear markets occur during periods of ultra-loose monetary policies, it is generally observed that incentives increase the demand for risky assets like Bitcoin.

For example, in September 2024, the price of Bitcoin increased by 12.3%, making it one of its best Septembers.** This rise coincided with China's cut of short-term interest rates and steps taken by banks to support real estate and equity markets by reducing reserve requirement ratios. TradingView data reveals a positive correlation between Bitcoin prices and the People's Bank of China's )PBOC### balance sheet over the past eight years.

A spokesperson for the crypto lending platform Nexo said, “During the periods when China injected liquidity in 2015 and 2020, excess money flowed directly into alternative assets. New stimuli could also boost appetite in global markets.” However, the spokesperson noted that China's strict regulatory controls could limit direct entries into the crypto market: “State-backed alternative investments or traditional safe haven assets like gold could also attract this liquidity.”

(# Germany and the role of the USA: How will global markets be affected?

The effects of China's expansionary fiscal policy may not be confined to its own borders. Germany's similarly allocating billions of euros to infrastructure investments could stimulate the investment climate in Europe. Although Germany has traditionally had strict fiscal discipline policies, it has chosen to increase government spending as the country's economy weakens.

These developments may act as a counterbalance to potential fiscal tightening in the US. President Donald Trump's reintroduced customs tariffs and spending cuts could exert pressure on risky assets such as Bitcoin by lowering global growth expectations. According to André Dragosch, Head of Bitwise Europe Research, "From a macroeconomic perspective, Bitcoin's performance is largely dependent on global growth expectations. Recently, these expectations have been revised downward due to increased trade uncertainty."

) What are the prospects for the price of Bitcoin?

Bitcoin is currently trading at the $90K level and maintaining its 200-day moving average. However, analysts warn that volatility could persist as uncertainties persist in the markets. Cryptocurrency and financial markets analyst Richard Ptardio stated that more volatility could be seen in Bitcoin ahead of the inflation data to be released in the United States and the Fed's interest rate decision.

Expectations of interest rate hikes in the US and fluctuations in the value of the dollar can play a critical role in determining global market risk appetite. Germany and China's expansive fiscal policies may balance potential tightening in the US, keeping the dollar under pressure. German 10-year bond yields have increased by 36 basis points to 2.73% since the end of February, triggering the rise in the euro/dollar exchange rate. Global weakness in the dollar could increase interest in risky assets.

How Bitcoin will be affected by this process will depend on how long the incentives of China and Germany will continue and how the US interest rate policies will be shaped. However, looking at historical data, periods of easing in China's monetary policies have generally supported upward movements in Bitcoin.**