Altseason’s Next Step: China’s Stimulus and Investors’ Response to Recession Fears
The cryptocurrency market is abuzz with anticipation as investors wait for the next step in the altseason. Two key factors are expected to influence the market’s trajectory: China’s central bank incentive and the increasing US finance return. The People’s Bank of China (PBOC) may introduce stimulus measures as early as September, according to analysts from Bloomberg Economics, Chang Shu and Eric Zhu. This move could redirect liquidity in cryptocurrencies, potentially driving old coins beyond their previous all-time highs.
Central banks stimulate growth by reducing interest rates or enabling special financing conditions, effectively increasing the money supply. This dynamic advantage benefits risk assets such as stocks and cryptocurrencies. The US M0 base currently stands at $5.8 trillion, followed by $5.4 trillion in the euro zone, $5.2 trillion in China, and $4.4 trillion in Japan. As China constitutes 19.5% of global domestic product, its monetary policy decisions remain crucial, even if the US Federal Reserve dominates the headlines.
Altcoin market capitalization without stablecoins, USD. Source: Tradingview / Cintelegraph. A report by 21Shares in March 2025 highlighted a striking correlation of 94% between the price of Bitcoin (BTC) and global liquidity, as well as the S&P 500 and gold. This correlation suggests that the economic incentive is an advantage for the cryptocurrency market.
Economic Incentive and Global Liquidity
The current economic landscape is marked by a decline in retail sales in China, with a 5.3% decrease in investments in fixed assets in July compared to the previous year. The survey-based urban unemployment rate also rose to 5.2% in July, compared to 5% in June. Despite these challenges, analysts from Nomura and Commerzbank argue that it is only a matter of time until stronger support guidelines arrive.
Top money, USD. Source: pork gukonis. The US consumer mood has worsened, with 60% of Americans expecting unemployment to worsen next year, according to the University of Michigan’s consumer survey. However, the markets have remained resilient, with the S&P 500 closing at a new all-time high and the returns of the 5-year treasuries also higher, indicating that investors are still tilting towards optimism.
Investors’ Response to Recession Fears
When the fight against recession increases, demand usually increases from assets that are supported by the US government, enabling investors to accept lower income. After falling to 3.74% on August 4, the 5-year returns recovered to 3.83% on Friday. This move shows that retailers are becoming less risk-averse and opening up space for a rebound in the Altcoin market capitalization.
US 5-year financial yield. Source: Tradingview / Cintelegraph. If China follows with stronger incentives, this additional liquidity could be the catalyst for a broad rotation in risk assets, potentially driving cryptocurrencies to fresh all-time highs.
This article serves general information purposes and should not be regarded as legal or investment advice. The views, thoughts, and opinions expressed here are solely those of the author and do not necessarily reflect the views and opinions of Cointelegraph or represent them. For more information, visit https://cointelegraph.com/news/altseason-s-next-step-depends-on-china-stimulus-investors-response-to-recession-fears?utm_source=rss_feed&utm_medium=rss_tag_altcoin&utm_campaign=rss_partner_inbound
