New Chinese Economic Stimulus Could Impact Global Bitcoin Trends
China announced new fiscal and monetary stimulus measures on Wednesday, aiming to increase consumption and counter the effects of growing trade tensions with the United States. The stimulus package comes as China targets a 5% GDP growth rate and sets a fiscal deficit target of 4% of GDP for the year.
Bitcoin has historically shown sensitivity to major economic stimulus actions. Last September, the cryptocurrency gained 12.3%, coinciding with earlier Chinese stimulus efforts that included interest rate cuts and reduced reserve requirements for banks. TradingView data reveals a positive correlation between Bitcoin prices and the People's Bank of China's balance sheet over the past eight years.
Economic analysts note that previous Chinese stimulus periods have influenced alternative asset markets. A Nexo spokesperson told The Block: "In previous instances when China has ramped up monetary stimulus and injected excess liquidity into the system, in 2015 and in 2020, excess liquidity found its way into alternative assets." They added that such measures could increase interest in both equities and alternative assets globally.
The stimulus announcement comes as China faces multiple economic challenges. Chinese Premier Li Qiang addressed these issues during the annual parliamentary meeting, noting rapid global changes and continuing pressures from the US-China trade conflict. China's economy faces additional headwinds from:
- Weak domestic consumption
- A troubled property market with high debt levels
- The threat of increased tariffs from the United States
Despite the potential positive impact on Bitcoin, some analysts remain cautious. Nansen Principal Research Analyst Aurelie Barthere stated that "China remains in a slow positive economic momentum, not a boom," adding that US policy changes currently have more influence on crypto markets than Chinese developments.
From a broader perspective, Bitwise European Head of Research André Dragosch noted that Bitcoin's performance appears most influenced by global growth expectations, which have recently been adjusted downward due to increasing tariff uncertainties.
Meanwhile, the United States has taken steps to strengthen its position in the cryptocurrency space. President Donald Trump recently instructed his Presidential Working Group on Crypto to establish a "Crypto Strategic Reserve" that would include Bitcoin, Ethereum, Solana, XRP, and Cardano. The federal government already holds approximately $17 billion worth of Bitcoin and $120 million in Ethereum, according to Arkham. This development follows Trump's January executive order to evaluate a national digital asset stockpile and comes just before the White House's first Crypto Summit scheduled for this Friday, where industry leaders will meet with officials led by executive director Bo Hines and AI & Crypto Czar David Sacks.
