The U.S. Federal Reserve is maintaining an anti-liquidity stance, while China is taking the opposite approach. According to MacroMicro, the credit impulse index in China has increased from 24% to 26% this year, indicating that the country is reinvigorating credit expansion relative to its gross domestic product. This is a positive sign for risk assets, including cryptocurrencies, as it suggests that China is willing to stimulate the market. With China’s credit expansion, investors can take advantage of an abundance of liquidity and reap the rewards that come with risk assets. China’s renewed credit expansion is an excellent opportunity for investors to access liquidity and benefit from the potential of cryptocurrencies.
China’s Credit Impulse and Bitcoin
As the global economy continues to grapple with the effects of the pandemic, China’s credit impulse could provide a much-needed boost. According to a paper published by the Federal Reserve in November, a continued rise in China’s credit impulse could contribute to the global financial cycle and support global risk sentiment. This, in turn, could expand global asset prices and global credit. Bitcoin, being a risk asset, tends to move more or less in line with stocks. Historically, there has been a strong correlation between China’s credit impulse and Asian equity markets, per Credit Suisse. As China’s credit impulse continues to rise, it could have a positive effect on Bitcoin and other risk assets.
China’s Credit Expansion Bodes Well for Bitcoin
The Chinese economy is showing signs of renewed credit expansion, with new bank lending hitting a record high of 10.6 trillion yuan ($1.54 trillion) in the first quarter of 2022. This is a 27% increase from the same period last year, and it could have a positive impact on the price of Bitcoin. Previous instances of credit expansion in China have coincided with major bearish-to-bullish trend changes in Bitcoin, so a continued rise in the credit impulse index may bode well for the cryptocurrency. Investors should keep an eye on the Chinese credit impulse index to see if it continues to rise, as this could be a sign of a bullish trend in Bitcoin.
China’s Credit Impulse Boosts Bitcoin
The recent surge in China’s credit impulse has had a positive effect on risk assets and crypto, according to David Brickell, director of institutional sales at crypto liquidity network Paradigm. This tidal wave of liquidity has been a major factor in Bitcoin’s sixfold rally to over $60,000 in the past 12 months. Investors have been drawn to the digital asset’s potential for long-term growth, as well as its ability to act as a hedge against inflation. With China’s credit impulse continuing to drive the market, Bitcoin could be set for further gains in the coming months.
Bitcoin Rallies on Renewed Credit Impulse
Bitcoin has seen a remarkable rally of over 70% this year, recovering from a year-long bear market. This surge is being attributed to a renewed uptick in the credit impulse, which is a measure of the amount of credit being extended by banks and other financial institutions. This is not the first time Bitcoin has seen such a revival. Similar bull runs occurred after the credit impulse bottomed out in May 2015 and December 2018. Analysts are expecting further credit expansion in China in the coming months, which could further boost Bitcoin’s price. As the world’s leading cryptocurrency, Bitcoin has become a popular investment option for those looking to diversify their portfolios and take advantage of the digital asset’s potential for long-term growth.
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.