Crypto battle royale game 'Off the Grid' launches on PlayStation and Epic Game Store

Quick Take

China is set to announce fresh fiscal stimulus measures on Saturday that could inject fresh liquidity into risk assets, including cryptocurrencies like bitcoin, analysts said.

Polymarket U.S. presidential election odds now favor Trump’s win at 55.5% over Harris at 43.7%, suggesting a Trump win could lead to a significant bitcoin price increase.

Bitcoin  BTC -0.90%

 and the wider cryptocurrency market could benefit from China's next wave of fiscal stimulus measures, expected to be announced on Saturday, according to several analysts. China’s Finance Minister, Lan Fo’an, is set to provide details on "intensifying" fiscal stimulus policies in a Saturday press conference, the State Council Information Office said.

Bitfinex analysts noted that China’s stimulus plans have become a focal point even in the cryptocurrency market, as fresh liquidity injected into the broader economy could benefit risk-on assets like crypto.

 

"We expect that a good amount of liquidity being injected into the market will be reflected across all risk-on assets, including crypto," Bitfinex analysts told The Block. 

The analysts added that China's stimulus packages' exact scale and scope could still surprise the market, and any anticipated effects are still not fully priced in. "This is especially if the measures are larger or more aggressive than expected," the analysts added.

Bitcoin market volatility expected to increase

The Bitfinex analysts added that bitcoin market volatility has been decreasing recently, but the digital asset could react positively to a significant macroeconomic development stemming from China. "Even if the stimulus is somewhat expected, the actual announcement could lead to a temporary spike in volatility, as traders adjust to the details of the stimulus package," they said.

Digital Asset Group Managing Director Alex Tapscott also emphasized that China’s intervention in financial and property markets, aimed at supporting asset prices and stimulating the economy, could fuel buying demand in the cryptocurrency market.

Easing monetary and fiscal conditions puts a bid under risk assets, and crypto is likely to benefit,” Tapscott said in an email to The Block.

Beijing announced a series of economic stimulus measures designed to lower borrowing costs and stimulate economic activity in late September. These measures included cutting interest rates on existing mortgages by 0.5 percentage points and reducing reserve requirements for banks to encourage lending.

RELATED INDICES

DETAILS

GMAI Top AI tokens 180.08 –3.80% 

DETAILS

GMDEPIN Top DePIN tokensn 90.61 –3.55%

Increased liquidity from China’s fiscal stimulus measures, coupled with potential further rate cuts by the Federal Reserve, could boost global risk assets and, by extension, the cryptocurrency market. This is reflected in the MSCI ACWI, a global stock index representing large and mid-cap stocks across 23 developed and 24 emerging markets, which recently hit record highs following the Fed's first rate cut of this cycle on September 18 and China's recent economic stimulus activity.

The MSCI International ACWI Net Index is now at an all-time high. Image: Financial Times and LSEG

Increased global liquidity correlated with bullish bitcoin trends

In a separate report from the ETC Group, analysts pointed out that the global money supply has reached an all-time high, which has historically correlated with bullish trends for bitcoin. They highlighted three key catalysts that could boost bitcoin in the coming months: supply dynamics because of the bitcoin halving cycle, a global economic recovery spurred by monetary policy pivots, and the upcoming U.S. presidential election.

M2 money supply has reached an all-time high. Image: MicroMacro.

The report also touched on the U.S. election, with betting markets like Polymarket showing Donald Trump leading Kamala Harris with odds of 55.5% to 43.7%. "If the U.S. elections were held today, a Trump win could imply an approximately 10.7% rise in bitcoin’s price, while a Harris win might lead to a 10.5% decline, based on historical sensitivities," the analysts said.

The ETC report said that bitcoin performed relatively well following past U.S. presidential elections in 2012, 2016 and 2020, regardless of the winning party. Still, it noted that this is the first presidential election where cryptoassets have been a part of the actual discussion, which is why it could have an even more significant impact on bitcoin's price.

Disclaimer: mindflare.shop is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of mindflare.shop. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. mindflare.shop continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.

© 2024 mindflare.shop All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.