The cryptocurrency market has been abuzz with the possibility of a new altseason, and the next step in this journey may depend on the stimulus measures taken by China and the response of investors to recession fears. The central bank of China, also known as the People’s Bank of China (PBOC), has been closely watched by investors and analysts alike, as its monetary policy decisions can have a significant impact on the global economy and, by extension, the cryptocurrency market.
The Importance of Liquidity
Central banks play a crucial role in stimulating economic growth by reducing interest rates or implementing special financing conditions, which effectively increases the money supply. This, in turn, can have a positive impact on risk assets such as stocks and cryptocurrencies. The PBOC’s next move is being closely watched, as it could provide the necessary liquidity boost to drive cryptocurrencies to fresh all-time highs.
In a report published in March 2025, 21Shares 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 cryptocurrency market is closely tied to the overall health of the global economy.
Altcoin market capitalization without stablecoins, USD. Source: Tradingview / Cointelegraph
Global Economic Trends
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.
Top money, USD. Source: pork gukonis
Recent data from China has shown a decline in retail sales in July compared to the previous month, with Goldman Sachs estimating that investments in fixed assets decreased by 5.3% in July alone compared to the previous year. China’s survey-based urban unemployment rate also rose to 5.2% in July, compared to 5% in June.
Stimulus Measures on the Horizon
Analysts from Bloomberg Economics, Chang Shu and Eric Zhu, have suggested that the PBOC could introduce stimulus measures “as soon as September”. Similarly, economists from Nomura and Commerzbank have argued that it is only a matter of time until stronger support guidelines arrive.
However, even if the PBOC takes a more expansionist attitude, cryptocurrency investors may hesitate if fears of a global recession intensify. The University of Michigan’s consumer survey published on Friday showed that 60% of Americans expect unemployment to worsen next year, which was recently recorded in the 2008/09 financial crisis.
US Consumer Mood and Retailers
Despite the gloomy outlook, the markets have remained resilient, with the S&P 500 closing at a new all-time high, while the returns of the 5-year treasuries were also higher, indicating that investors are still tilting towards optimism.
Bitcoin’s all-time high profits disappeared hours later: here’s why
US 5-year financial yield. Source: Tradingview / Cointelegraph
When the fight against recession increases, demand usually increases for assets 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, showing that retailers are becoming less risk-averse and opening up space for a rebound in the altcoin market capitalization.
If China follows with stronger stimulus, this additional liquidity could be the catalyst for a broad rotation in risk assets, driving cryptocurrencies to fresh all-time highs. For more information, visit https://cointelegraph.com/news/altseason-s-next-step-depends-on-china-stimulus-investors-response-to-recession-fears
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 its affiliates.
