SUMMARY
- QCP Capital analysts expect additional Chinese stimulus measures that could enhance the appeal of risk assets, including cryptocurrencies.
- Although China recently announced various stimulus initiatives that positively impacted global stock indices, they have yet to revitalize the stagnant cryptocurrency market.
QCP Capital analysts project that additional stimulus measures from China will cultivate a more bullish environment for risk resources, including cryptocurrencies. They expect more easing from the People’s Bank of China (PBoC), adjusting with global central banks, except for the Bank of Japan, that are poised to inject liquidity into the market. This macroeconomic scene progressively favors risk resources, as highlighted by the analysts who noted that an upcoming surge in cryptocurrency prices might capture numerous investors off guard. They emphasized the potential for explosive price developments in crypto, stating that various bullish catalysts are present, suggesting that another upward move may shock many who are currently sidelined.
Recently, China’s central bank revealed a comprehensive set of policies aimed at revitalizing the struggling housing and equity markets, which have shown quick positive impacts, as evidenced by the SSE Composite Index’s 1.16% rise, closing at 2,896.31. European equities also experienced gains, especially in sectors tied to the Chinese economy, with the FTSE 100 rising by 0.35% and the STOXX Europe 600 expanding by 0.11%. In the U.S., the S&P 500, Dow Jones, and Nasdaq all posted modest gains. However, the worldwide cryptocurrency market cap dropped to $2.34 trillion, reflecting a 0.9% decrease over the past 24 hours, highlighting a disparity in performance.
BRN analyst Valentin Fournier commented that the liquidity influx from China’s stimulus is likely to benefit lower market cap digital resources as the bull run continues. He emphasized the significance of selecting the right ventures presently to maximize returns amid the upcoming altcoin season. Currently, Bitcoin is stabilizing below $64,000, with numerous short positions in the market that might be squeezed, possibly fueling upward volatility. Whereas a few indicators recommend a sustained rally as the year ends, caution is advised, as overbought conditions might lead to a dip.
Furthermore, QCP Capital analysts noted that the broadening yield spread between 2-year and 10-year U.S. Treasury notes reflects developing optimism towards risk resources. The yield spread has expanded by 40 basis points over the past month, presently trading at 21 basis points. An extending spread regularly signals expectations of financial development, supporting the viewpoint for risk resources in the medium to long term.