China’s Fiscal Package Could Send Bitcoin Soaring: Here’s Why

As the US presidential race heats up, a possible victory for former President Donald Trump could trigger significant economic ripple effects, especially in China.

In anticipation, Beijing’s National People’s Congress (NPC) Standing Committee is set to meet from Nov. 4 to Nov. 8 to discuss a historic 10 trillion yuan (around $1.5 trillion) fiscal package.

China to Discuss Another Fiscal Aid Next Week

Citing sources close to the matter, Reuters reported that China’s NPC Standing Committee will debate raising over 10 trillion yuan via special treasury and local government bonds. The package is expected to allocate around 6 trillion yuan for local government debt relief and as much as 4 trillion Yuan for purchasing idle land and property.

“China’s NPC Standing Committee session scheduled from November 4 to November 8,” said CN Wire, which reports local Chinese news.

The discussions will begin a day before the US election and conclude after the 47th president is named. This proposed stimulus package aims to inject essential liquidity into the economy. General sentiment suggests the NPC’s planned measures could be expedited if Donald Trump wins, potentially adding fiscal uncertainty to an already fragile US-China relationship.

Read more: How to Protect Yourself From Inflation Using Cryptocurrency

Notably, this package would follow earlier reports of China’s $142 billion fiscal aid. According to BeInCrypto, some analysts speculated that the initial aid could spark a Bitcoin bull run. Observers now believe the expanded $1.5 trillion effort may amplify this effect.

This economic stimulus could channel liquidity beyond traditional markets and into cryptocurrencies, potentially accelerating Bitcoin’s upward momentum.

Crypto Analysts’ Take on How This Liquidity Could Impact Bitcoin Price

The cryptocurrency sector has reacted positively to China’s proposed stimulus measures. Crypto analyst Kyle Chasse, renowned for his market insights, tweeted, “Money printer about to go parabolic.” This post captures the sentiment that this influx of liquidity could drive Bitcoin prices higher.

Based on social media reactions, the general perception is that a Trump win, paired with China’s vast fiscal stimulus, could prompt investors to seek shelter in alternative assets like Bitcoin. This is especially true considering the weakening confidence in fiat currencies worldwide.

Arthur Hayes, co-founder of BitMEX, echoes this bullish perspective. In his recent blog post, Hayes argued that China’s anticipated quantitative easing (QE) will spark a surge in Bitcoin. Hayes is particularly optimistic about Bitcoin’s performance amid rising money supplies. He pointed out that in times of currency debasement, few assets outperform Bitcoin,

“No other asset class outperforms the debasement of the currency like Bitcoin does… As long as fiat is created, Bitcoin will soar,” excerpts in the blog read.

Arthur Hayes expects investors to recognize Bitcoin as a hedge, shifting capital into the digital asset to preserve purchasing power. BTC, now within striking distance of its all-time high of $73,777, has outperformed traditional assets like gold, the S&P 500, and real estate. This highlights its appeal as an inflation-resistant investment.

China’s increased liquidity could make Bitcoin particularly attractive to investors wary of fiat currency depreciation. Known as “safe-haven demand,” this trend sees investors turning to alternatives that offer protection against inflation. With an influx of liquidity in China’s economy, demand for assets that bypass the yuan or dollar — like Bitcoin — could rise.

The NPC’s fiscal package discussions, coinciding with the US election, may further boost Bitcoin’s appeal. However, Beijing’s stance on Bitcoin remains cautious. China banned direct yuan-to-Bitcoin exchanges in 2017, though local traders have since adopted peer-to-peer (P2P) solutions for yuan-to-Bitcoin conversions.

Platforms like Binance and OKX support these P2P exchanges, circumventing traditional trading pairs and providing a discreet avenue for Bitcoin transactions. This workaround, dubbed “Sino-LocalBitcoins” by Arthur Hayes, highlights the adaptability of Chinese traders and their sustained interest in cryptocurrency.

Analysts believe that China’s underground Bitcoin market could thrive amid economic instability, particularly as Chinese quantitative easing (QE) looms. Hayes notes that Beijing’s restrictions on mainland investments in Hong Kong-based Bitcoin ETFs reflect its cautious approach, aiming to limit capital outflows and maintain control over financial markets.

Read more: Why do Hong Kong Spot Crypto ETFs Matter?

For now, the crypto community is closely watching to see if Bitcoin might enter another bull run, driven by US election outcomes and a major injection of Chinese liquidity.