Why China’s Economic Stimulus May Be the Catalyst for the Next Crypto Bull Run

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China’s economy is showing cracks, and the People’s Bank of China (PBOC) may soon roll out fresh stimulus to inject life back into the system. For crypto investors, especially those watching altcoins, this could be the big catalyst they’ve been waiting for.

Economic Weakness Forces Beijing’s Hand

Recent data paints a worrying picture. Retail sales slipped by 0.1% in July, while fixed-asset investment plunged 5.3% year-on-year, the sharpest fall since the 2020 pandemic shock. Industrial output barely grew, up just 0.4%. On top of that, unemployment ticked higher to 5.2%. With such numbers, Bloomberg economists from Nomura and Commerzbank expect the PBOC to step in with stimulus, possibly as soon as September.

Why Stimulus Matters for Crypto

Central bank action usually takes the form of interest rate cuts or special financing conditions, which expand the money supply and make borrowing cheaper. More liquidity tends to lift risk assets like stocks and, historically, cryptocurrencies. A report by 21Shares earlier this year even showed Bitcoin has a 94% correlation with global liquidity, stronger than gold or the S&P 500. If China starts pumping money into its system, altcoins could ride the wave and potentially push past old highs.

While China weighs its moves, U.S. markets are also flashing signals that matter for crypto. Despite recession fears, the S&P 500 hit record highs above 6,400. Treasury yields also rebounded, showing investors are willing to take on more risk. This backdrop of resilience in America, paired with possible Chinese stimulus, creates a perfect setup for altcoin momentum.

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Altcoins in the Mix

Before China’s 2017 crackdown, the country was a hotspot for crypto, with projects like NEO and VeChain enjoying strong local support. Even now, despite tight restrictions and only about 5.2% ownership, Chinese investors often access crypto markets through offshore platforms. If stimulus flows into the economy, demand for altcoins with Chinese ties and the broader market could see renewed strength.

Risks Still Remain

That said, the outlook isn’t without uncertainty. Global recession fears, regulatory hurdles, and ongoing U.S.-China tensions could limit gains. If stimulus policies are short-lived or fail to impress, the altcoin rally may be more muted. For now, all eyes remain on Beijing’s next move.