Economists are urging China to implement a massive “shock and awe” stimulus package worth $1.4 trillion, aimed at revitalizing the economy and potentially sparking a significant surge in Bitcoin and cryptocurrency prices.
This call for stimulus comes amidst concerns about China’s economic health, with recent data indicating stagnant consumer inflation and subdued GDP growth. Experts believe that a substantial stimulus injection is necessary to combat deflationary pressures and restore confidence in the economy.
Fred Neumann, chief Asia economist at HSBC, highlighted the prevailing lack of confidence and high household savings rate in China, suggesting that a near $1 trillion stimulus package could be the “baseline” for reinvigorating economic activity. Neumann emphasized the importance of taking decisive action to break the cycle of incrementalism and rebuild consumer confidence.
Robin Xing, chief China economist at Morgan Stanley, further emphasized the urgency of addressing deflation, stating, “The longer that deflation stays, the bigger the ask in terms of reflation.” Xing suggested a “bull case” scenario where China implements $1.4 trillion worth of stimulus over two years.
The potential impact of such a stimulus on the cryptocurrency market has been underscored by Arthur Hayes, a cofounder of BitMex and the Maelstrom investment fund. Hayes predicts that China will “finally unleash its long-awaited bazooka fiscal stimulus” next year, leading to a “glorious” crypto bull market between China and the U.S.
Additionally, there’s growing speculation about China’s potential openness to cryptocurrencies. Brock Pierce, cofounder of Tether, believes that it’s not a matter of “if” but “when” China will embrace crypto.
Overall, the anticipation of a significant stimulus package from China, coupled with the possibility of increased crypto adoption, is generating optimism within the cryptocurrency community.
