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The financial markets are on the verge of a new monetary easing cycle, marked by strategic decisions from major central banks. Following the U.S. Federal Reserve, which began a reduction of its key rates last September, it is now the People’s Bank of China (PBOC) that is set to take over. Beijing plans a new cut in interest rates to stimulate the economy and counter the increased deflation of the yuan, a phenomenon that worries Chinese authorities and weighs on investor confidence. In light of this situation, Arthur Hayes, co-founder of BitMEX and macroeconomic analyst, anticipates a chain reaction in the financial markets. He asserts that the combination of a more flexible monetary policy in China and a favorable environment in the United States will enhance the appeal of alternative assets, particularly bitcoin and cryptos. According to him, this injection of liquidity, combined with a reallocation of institutional capital, could trigger a massive rally in the crypto market during this year 2025.
China on the verge of further easing its monetary policy
For several months, the People’s Bank of China (PBOC) has been sending clear signals in favor of monetary easing. During its fourth-quarter meeting, the institution confirmed, in a statement released on Friday, January 3, 2025, its intention to once again reduce its key rates as well as the required reserve ratio for banks. This announcement fits into a strategy aimed at boosting the economy, as Chinese growth shows signs of weakness.
This monetary shift can be explained by several factors. For several quarters, domestic demand in China has been weakening, impacting consumption and investments. To counter this dynamic, the PBOC had already cut its rates last September, lowering them from 1.7 % to 1.5 %. However, these measures prove insufficient in the face of sustained deflation of the yuan, which increases the debt burden for many businesses. In a new statement, the central bank stated that these adjustments would occur “in due time,” as it emphasizes the necessity of supporting credit and preventing excessive contraction in the real estate and financial markets.
Meanwhile, the U.S. Federal Reserve is adopting a similar stance. After a phase of monetary tightening aimed at containing inflation, the Fed began a cycle of rate reductions in September 2024. This convergence between the monetary policies of the two largest global economic powers strengthens expectations of a more favorable environment for risky and alternative assets, including cryptos. Many observers believe that this injection of liquidity could benefit bitcoin, by enhancing its attractiveness as a store of value amidst fluctuations of traditional currencies.
Bitcoin at the forefront of this injection of liquidity
Arthur Hayes, co-founder of BitMEX, sees in this Chinese monetary easing a major opportunity for the crypto market. According to him, the reduction of key rates in China will favor a massive influx of capital towards safe havens, notably gold and bitcoin. He explains that in a context of devaluation of fiat currencies, investors will seek to protect their capital by choosing alternative assets.
In a post published on Medium, he elaborates on this analysis and claims that “when China deploys its monetary bazooka, American institutional investors will have no choice but to buy Bitcoin ETFs.” He considers that bitcoin now represents “the most performing asset against the devaluation of fiat currencies,” a reality that large fund managers can no longer ignore. This statement is based on a key observation: the recent rate cuts by the U.S. Federal Reserve have already led to a significant increase in the price of bitcoin.
Last September, after the announcement of the first monetary easing by the Fed, bitcoin surpassed the $60,000 mark, which marks a resurgence of interest in this asset. Since then, the crypto has reached a record of $100,000, a rise largely attributed to its status as a store of value amidst monetary uncertainties. Hayes also highlights that this dynamic is accompanied by an increase in inflows into U.S. Bitcoin ETFs and a rising Coinbase Premium Index, two indicators showing a massive return of institutional investors to crypto.
If Arthur Hayes’ predictions come to fruition, 2025 could be a historic turning point for bitcoin and the entire crypto market. The increase in inflows into U.S. Bitcoin ETFs and the progression of the Coinbase Premium Index already confirm a growing interest from institutional investors. However, several uncertainties remain. The regulation of cryptos remains a key variable, and a tightening of policies could hinder this bullish momentum. Moreover, a rebound in inflation could force central banks to revise their monetary strategy, thus limiting the impact of available liquidity. The economic tensions between China and the United States add a geopolitical dimension that could influence investors’ appetite for risky assets. Despite these uncertainties, a trend is emerging: bitcoin is increasingly establishing itself as an essential asset in global macroeconomic strategies. As central banks adjust their policies, crypto could play a central role in redefining global financial balances.
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Diplômé de Sciences Po Toulouse et titulaire d’une certification consultant blockchain délivrée par Alyra, j’ai rejoint l’aventure Cointribune en 2019.
Convaincu du potentiel de la blockchain pour transformer de nombreux secteurs de l’économie, j’ai pris l’engagement de sensibiliser et d’informer le grand public sur cet écosystème en constante évolution. Mon objectif est de permettre à chacun de mieux comprendre la blockchain et de saisir les opportunités qu’elle offre. Je m’efforce chaque jour de fournir une analyse objective de l’actualité, de décrypter les tendances du marché, de relayer les dernières innovations technologiques et de mettre en perspective les enjeux économiques et sociétaux de cette révolution en marche.
DISCLAIMER
The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.
