Bitcoin and Cryptocurrency Market Poised for a 2024 Rally Amid US Dollar Concerns
Bitcoin and the broader cryptocurrency market are expected to surge in 2024 as fears mount over the potential collapse of the US dollar. Over the past year, Bitcoin’s price has nearly doubled, spurred by speculation that Russia might soon adopt the cryptocurrency. A new development in China could further amplify this market shift.
Economists suggest that China may introduce a substantial $1.4 trillion stimulus package, which could revitalize its economy and drive up Bitcoin and crypto prices. HSBC’s chief Asia economist, Fred Neumann, has painted a grim economic picture, citing a stagnant household savings rate and weak consumer spending. Neumann has advocated for a bold stimulus approach, emphasizing that incremental measures over the past 18 months have failed to restore confidence. He argues that a stimulus package of around $1 trillion is essential.
“Shock and awe can sometimes be the right strategy,” Neumann stated, noting that gradual efforts have not been effective in reviving confidence. A significant stimulus package is anticipated to have a profound impact on both the Chinese economy and the global cryptocurrency market.
Recent economic data from China adds to the concern. The consumer price index (CPI) increased by just 0.6% in August, falling short of the expected 0.8% rise. This weaker-than-expected inflation has heightened fears of a deflationary spiral, intensifying pressure on the government to act decisively. China’s GDP grew by 4.7% in the second quarter of 2024, but real growth, adjusted for inflation, was only 4%, indicating ongoing price pressures.
Robin Xing, chief China economist at Morgan Stanley, emphasized the need for a large-scale stimulus, predicting that a $1.4 trillion package over the next two years would be China’s “bull case.” “The longer the deflation persists, the greater the need for reflationary measures,” Xing remarked.