tl;dr
The cryptocurrency market faces a critical juncture as China's central bank (PBOC) considers stimulus to counter economic slowdown. Such measures could boost liquidity and trigger a rally in altcoins, potentially surpassing previous highs. China’s monetary policy significantly impacts global assets,...
The cryptocurrency market stands at a pivotal moment as the People’s Bank of China (PBOC) contemplates stimulus measures to counteract slowing economic activity. Analysts predict that an injection of liquidity from Beijing could spark a notable rally in altcoins, potentially pushing prices beyond previous all-time highs.
While much attention centers on the US Federal Reserve, China’s monetary policy wields equally significant influence on global risk assets, including cryptocurrencies. A March 2025 21Shares report revealed a 94% correlation between Bitcoin’s price and global liquidity, surpassing that of the S&P 500 and gold. This relationship highlights how central bank strategies shape investor sentiment across crypto markets.
Currently, the U.S. M0 monetary base is $5.8 trillion, followed by $5.4 trillion in the eurozone, $5.2 trillion in China, and $4.4 trillion in Japan. With China contributing nearly 19.5% of global GDP, the PBOC’s decisions heavily impact international capital flows despite the US Fed’s dominant media presence.
Economic indicators from China in July 2025 signal strains: retail sales declined by 0.1% month-on-month, fixed-asset investment dropped 5.3% year-on-year—the sharpest decline since March 2020—and industrial production edged up only 0.4%. Additionally, urban unemployment rose from 5.0% in June to 5.2% in July. Bloomberg and economists from Nomura and Commerzbank anticipate stimulus measures as early as September.
Stimulus often comes through interest rate cuts or special financing, expanding the money supply and boosting risk assets like stocks and cryptocurrencies by easing liquidity constraints and lowering borrowing costs. For altcoins, sensitive to shifts in global liquidity, such measures could reignite demand and market momentum.
In the US, despite recession concerns, markets remain resilient. The University of Michigan’s consumer survey shows 60% of Americans expect worsening unemployment, a figure reminiscent of the 2008–09 crisis. Yet, optimism prevails: the S&P 500 surpassed 6,400 points, and 5-year Treasury yields rose from 3.74% to 3.83%, indicating reduced risk aversion and a willingness to embrace riskier assets.
This blend of steady equity markets, rebounding yields, and potential Chinese monetary stimulus creates a promising backdrop for altcoin recovery. Should the PBOC enact expansionary policies, increased liquidity might drive a broad rotation into cryptocurrencies, lifting prices across multiple tokens.
Historically, China was a major player in crypto and altcoin markets before the 2017 crackdown, with projects like NEO and VeChain enjoying strong local support. Although retail participation in China has dipped to about 5.2% due to government rules, Chinese blockchain projects maintain robust enterprise and technical backing. Many Chinese users also engage in crypto through offshore platforms despite restrictions.
Nonetheless, uncertainties loom. Global recession fears, geopolitical tensions, and shifting regulations could dampen enthusiasm. The efficacy of China’s stimulus depends on both execution and market perception; if measures fall short or are short-lived, altcoin gains may be limited. The US economic environment also adds complexity—with rising Treasury yields signaling changing inflation and growth expectations, while delayed tariffs on China continue to add geopolitical variables.
Investors navigating this intricate landscape should consider both the liquidity environment shaped by central banks and broader global factors. The interplay of these forces will determine whether altcoins embark on a strong rally or face headwinds in the coming months.