- PBoC’s liquidity injection and housing market boost could drive asset price growth.
- U.S. yield curve widening reflects rising optimism for economic recovery and growth.
- Justin Sun predicts China’s economic actions could positively impact the crypto market.
The People’s Bank of China (PBoC) and the US Federal Reserve are adding liquidity to the market, increasing hopes for asset price growth. Crypto markets are likely to benefit from this positive environment as digital economies expect more financial easing.
Alongside the positive outlook, the PBoC has also taken strong measures to address its slowing economy, particularly in its housing and equity markets. On Monday, the PBoC rolled out policies to support the housing sector and increase liquidity in the asset market.
As a result of these proactive measures, the Chinese A50 futures jumped by 8%, with mainland Chinese and Hong Kong indices marking significant gains. A key measure has been a 500 billion RMB swap facility, previously available only to national banks, which now lets non-bank financial institutions purchase Chinese shares.
Read also: Justin Sun Thinks China Will Spark a Crypto Bull Run – Here’s Why
PBoC Cuts Lending Rate
Also, the PBoC has cut the rate for one-year medium-term lending facility (MLF) loans from 2.30% to 2.00%, liquidating 300 billion yuan ($42.66 billion) into the market. The central bank explained that this adjustment will make monetary policy more transparent and address the long-term funding needs of financial institutions.
Read also: China’s Crypto Clampdown Persists: PBOC Appointment Dashes Hopes
Meanwhile, in the United States, a rising 2s10s yield spread, currently at 21 basis points, indicates a growing confidence in economic growth. This spread, which represents the difference between the two-year and ten-year US Treasury yields, has increased by 40 points over the past month.
In response to China’s recent economic actions, Tron founder Justin Sun stated that China is already injecting liquidity into its economy ahead of the U.S., potentially impacting the crypto market.
Sun had made headlines earlier with predictions about China’s role in the crypto space. While there is no official word on China reversing its crypto asset ban, Sun’s latest comments are attracting attention from investors, particularly as China works to revive its economy.
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