QCP Capital analysts predict that additional stimulus from China will create a more bullish environment for risky assets, including cryptocurrencies.
‘We believe there is more easing coming from the People’s Bank of China (PBoC), and they have communicated that, and combined with the US Federal Reserve’s participation in the global austerity cycle, all major central banks except the Bank of China are Japan, ready now. to inject more liquidity into the market. The macro world continues to look increasingly bullish for risky assets, including cryptos, according to QCP Capital analysts.
The analysts believe that due to several positive factors driving the market, a potential upcoming surge in cryptocurrency prices could catch many investors off guard. “We know how explosive crypto prices can be, and with so many bullish catalysts, we think the next move higher will surprise and sideline a lot of people,” she added.
On Tuesday, China’s central bank introduced a comprehensive package of policy measures to revive struggling housing and stock markets. These measures appear to be effective: the SSE Composite Index rises 1.16%, an increase of 33.18 points, to close at 2,896.31.
European shares rose for a second day, with sectors linked to the Chinese economy posting notable gains as Chinese stimulus fueled widespread risk sentiment. In London, the FTSE 100 closed 0.35% higher, while the STOXX Europe 600 rose 0.11%. On Tuesday, the S&P 500 closed 0.25% higher, the Dow Jones rose 0.20% and the Nasdaq rose 0.56%.
Despite this positive performance in US stock markets, the global cryptocurrency market capitalization fell to $2.34 trillion, reflecting a decline of 0.9% in the past 24 hours.
BRN analyst Valentin Fournier noted that the influx of liquidity from China’s stimulus measures will likely lead to gains in lower-cap digital assets as the bull run continues. He emphasized that “identifying the right projects to invest in now will be crucial for capitalizing on the coming altcoin season.”
“Currently, Bitcoin is stabilizing below $64,000, and there are numerous short positions in the market that could come under pressure, adding to the upside momentum,” he continued. “While some indicators point to a continued rally as we approach the end of the year, investors should remain cautious as overbought conditions could trigger a potential dip.”
The QCP Capital analysts also pointed out that the difference in yields between 2-year and 10-year U.S. Treasuries points to the potential for increased sentiment toward risky assets. “We have seen the yield spread between the 2-year and 10-year US Treasury bonds widen further over the past month, moving 40 basis points higher and now trading at 21 basis points. A widening difference generally indicates optimism about economic growth, which supports economic growth. risky assets in the medium to long term,” they said.
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