China May Be Poised to Spark a $1.4 Trillion Crypto Market Shakeup

China’s economy has been an important player in the global financial landscape for a long time as it has influenced markets all over the world. This is why recent discussions suggest that China might be on the brink of making a significant move in the Bitcoin market, which could end up affecting other cryptocurrencies as well.

This move takes the form of a potential economic stimulus package worth $1.4 trillion that’s on the horizon and which might end up boosting crypto prices, especially Bitcoin. Here’s how this could all play out.

The Role of Bitcoin and Cryptocurrencies in Economic Recovery

With China contemplating a huge financial stimulus, this move might have major implications for Bitcoin and other cryptocurrency markets. The reason is that Bitcoin is often referred to as digital gold due to its history as an alternative to traditional financial markets, and fiat currencies when they fall victim to inflation and monetary policy changes.

Many industries are now also adopting crypto payments, driving more widespread adoption of it in the process. Among them, real estate, e-commerce, and the iGaming sector feature significantly.

As a result of these crypto-centric platforms in the online gambling space, we’re now seeing more and more businesses likedecentralized casinos and offshore crypto casinos popping up. According to crypto expert Jose Rafael Aquino, the platforms that use cryptocurrencies as a payment method are able to leverage blockchain technology further to provide other perks like provably fair gaming, fast transactions, and anonymous gambling.

With these industries offering more benefits to consumers, they could start seeing significantly more traffic as crypto becomes the go-to currency to hedge against inflation. According to the co-founder of Bitmex and the Maelstrom investment fund Arthur Hayes, the amount of people expected to flock to cryptocurrencies could lead to a “glorious” Bitcoin price boom due to the potential stimulus.

China’s Economic Struggles and the Need for a Stimulus

Now that we’ve seen what China’s potential stimulus package could mean for the crypto scene, let’s take a look at why it’s seen as likely to roll out. Firstly, the country’s economic slowdown has become increasingly evident as recent data reveals stagnant growth in consumer prices and lower-than-expected inflation.

Currently, China’s consumer price index (CPI) for August 2024 rose by just 0.6% year-on-year. This is significantly lower than the 0.8% growth that a poll of Wall Street Journal economists forecasted.

Fred Neumann, a chief HSBC Asia economist, also argues that China needs financial intervention to stimulate economic growth and restore confidence in its fiscal strength. Neumann has even suggested a shock-and-awe approach by stating that a stimulus package worth around $1 trillion will be a good baseline to jumpstart the economy.

Could China End its Crypto Ban?

With a possible stimulus package coming and with cryptocurrencies’ ability to act asa cushion against economic instability, the big question now is when will China lift its long-standing ban on Bitcoin and cryptocurrency trading.

However, this view may be shifting as crypto investors with a focus on China, such as Jsutin Sun and Brock Pierce, believe the country is drawing closer to reopening its doors to cryptocurrencies. Pierce, who’s co-founder of Tether and a prominent figure in the crypto scene, has even suggested that China embracing crypto is inevitable.

According to Pierce, the question is no longer if but when China will reintegrate cryptocurrencies back into its financial system. There have even been new crypto regulations and stablecoin initiatives in Hong Kong that some are seeing as potential catalysts in softening mainland China’s strict stance, which has also fueled all the speculation.

Global Implications of China’s Crypto Move

Should China choose to stimulate its economy and lift its crypto restrictions, this move will have far-reaching implications for the global market,as we already saw when the country first cracked down on crypto. Firstly, it could revive the dominance Chinese miners and traders had in the Bitcoin ecosystem.

This is a likely outcome since even with the ban, China is still the world’s second-largest Bitcoin mining operation hub. What fueled these operations was the nation’s cheap energy and vast technical expertise, both of which it still has.

Furthermore, a $1.4 trillion injection into the economy could encourage investors all over the world to put money into high-growth assets, with Bitcoin and other cryptocurrencies being an attractive option. This could bring another wave of institutional and retail investors into these markets and accelerate the global adoption of digital currencies.

China’s decision could encourage other strict policymakers to reconsider their stances on cryptocurrency. This will be because with China embracing crypto again, other countries may feel enough pressure to adapt and compete.

Conclusion

If China’s potential $1.4 trillion stimulus package, coupled with a possible relaxation of its stance on cryptocurrencies, becomes a reality, this could result in big changes in the global crypto market. As inflationary concerns and deflationary pressures are weighing heavily on China, these events increases the likelihood of this happening.