Impact of Chinese economic crisis on Bitcoin and crypto?
On the latest episode of Cointelegraph’s Macro Markets, analyst Marcel Pechman discusses how Turkey’s recent interest rate hike could attract new cryptocurrency investors and how China’s impending economic crisis could impact Bitcoin and cryptocurrencies worldwide.
Turkey’s central bank has raised interest rates by 6.5%, to 15%, in a dramatic effort to combat inflation. This comes as the local currency, the lira, has fallen by 80% against the US dollar in five years.
According to Pechman, it does not matter whether the US dollar maintains its position as the primary global reserve currency. Turkey and Argentina’s 70% inflation in 2022 are excellent examples of how decentralized cryptocurrencies could be the only hope for hundreds of millions, if not billions, of people who cannot save and transact in foreign currencies.
The next part of the show examines whether China’s economic weakness affects Bitcoin and how its central bank digital currency could boost demand for cryptocurrencies. Goldman Sachs economists have lowered their estimates for Chinese GDP growth to 5.4%, citing “challenges from the property market, pervasive pessimism among consumers and private entrepreneurs, and only moderate policy easing.”
- Bernstein US regulators open to Spot Bitcoin ETF.
- Berkshire Hathaway sold 2.53 million shares of BYD, a Chinese company.
- AVAX gains 18%, hinting at trend reversal.
Pechman demonstrates how the iShares MSCI China exchange-traded fund has been a more accurate representation of Bitcoin’s price and explains the significance of the Chinese economy to global growth. Ultimately, Pechman believes that if the Chinese stock market declines, cryptocurrency prices will be under pressure as well.
Finally, Pechman presents a bullish argument for cryptocurrency adoption during a recession or, in China’s case, lower growth, including the use of stimulus checks to purchase cryptocurrencies.
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