China Money Printing = Bitcoin Explosion

China Money Printing = Bitcoin Explosion

China China China we have not been paying enough attention to the other side of the Pacific and our conversations here in the cryptocurrency markets and yes obviously the USA is still the 500 lb economic Silverback Cilla that pummels everything with his big fat fists but there is a dragon that has about to unleash 140 billion dollars of stimulus that could of course send shock waves right around the world and pump up our Bitcoin bags most importantly China is releasing one trillion Yuan worth about 140 billion bucks in long-term special treasury bond to raise funds of course that’s going to use to stimulate key economic scepters of its struggling economy right now how will this affect the market and more importantly more specifically more interestingly for crypto investors our bags well let’s find the answers together first things first we need to ask what exactly are these bonds anyway well the simplest of terms it is of course a contract issued out buy a sovereign government like China that says hey I owe you some money and I promise to pay you back after a specific period of time and with interest of course for you taking the risk and buying those Bonds in the first place now governments usually do this to plug holes in their budgets stuff like that you know so now we also have to remember that the most popular bond is the one issued out by Uncle Sam America that’s not surprising because for all of the US economy’s faults us bonds are backed by the full faith and credit of the US government which most people still believe is pretty gosh darn good and they have a strong track record of course of paying their debts on time which matters obviously thus is considered to be a safe haven for investors especially in times of economic uncertainty and now that we know what the bond is our next question is why is China doing this well analysts are looking at a couple of different reasons the first reason is that the local governments in China have actually been borrowing very heavily through uh local government financing vehicles in order to fund you know infrastructure project Bridges and ports and rail whatever kind of stuff that you know local governments do anyway so these debts they’re maturing in very large amounts right now with a record high of 4.7 trillion Yuan expected this year alone so issuing long-term bonds allows for the Central and National governments to raise money and to potentially help mitigate and manage a bit of this local government debt burden the second is because the economy in China is facing several challenges right now despite the fact that China is the global Factory there are things happening we’ve talked about these the property downturn weaker consumer spending loss of business confidence I mean the co thing really hit the Chinese economy bad and it hasn’t fully recovered yet the government needs funds to invest in infrastructure and other areas to keep the economy growing keep things moving forward of course China’s also facing a demographic crisis like many countries a top ranking official is also saying that the bonds will be used to support the implementation of major national strategies and to build up security capacity in short the Chinese government they need some money man these bonds which will mature in 202 50 50 years who’s who’s buying that oh my God anyway there’re a quick way of getting cash for the government so why is all this important obviously first we need to understand that China is the second largest economy in the world and it controls more than 177% of the global GDP and is a major manufacturing Powerhouse for basically everything so whatever happens in China yes will affect the world market and if we dig deeper one of the most significant potential impacts of China’s Bond sales is the injection of liquidity into the Global Financial system remember China let us out of liquidity slump in late 2022 see when China issues bonds it essentially borrows money from investors this new money is injected into the Chinese Financial system but the story doesn’t end there investors who are buying these Chinese bonds then use existing cash cash reserves held in bank accounts or in different investment portfolios and stuff like that this cash then Finds Its way to China’s Central Bank or the People’s Bank of China now this new found cash then becomes fuel for whatever project that they have in mind the central bank can then use this money to purchase other Financial assets like government bonds I know I know I know right that’s but that’s what they do whether by other countries or you know themselves anyway they can also buy gold and stuff like that too look by doing this the Chinese Central Bank is basically injecting cash into the Global Financial system thus increasing the money supply and all that money gets spent on infrastructure projects and stuff too again more money in the economy globally the government can also use the money to fund projects and again all this money eventually Finds Its way into the financial system money is the oil of the economy think of it this way any thing that they do any projects it’s going to have contractors it’s GNA have employees it’s GNA have companies working together people need to produce the C and the trucks and all this kind of stuff so once all those people get paid the money will either be spent saved or invested either way it gets back to the financial system now with the increased money supply there’s more competition among lenders that could drive down interest rates globally now this of course all makes borrowing cheaper for businesses and for governments worldwide thus stimulating economic activity and potentially leading to higher investment and higher consumer spending now here’s where it gets very interesting of course for the cryptocurrency investors you probably we’ve all been waiting for the Fed chair Jerome pal to come out and say hey guys we had enough of this High interest rate that we’ve been doing and we’re ready to bring them down okay however as we saw in the latest readings of the PPI and the CPI we might have to wait a little bit longer because we’re still at 3.4% inflation they want to get back down to two so unless the inflation rate magically goes down to 2% overnight or the FED just decides well enough’s enough we can’t really crush the economy anymore well we might have contend with that higher rates for longer however the Chinese they are complicating things even further by dumping US debt right now this of course creates more pressure for the Americans to lower rates because without China buying their debt right now and in fact with China selling US debt it’s a problem and the US is increasingly thus forced to flood the system with money as well everybody’s printing baby print it all everyone’s painted themselves into a corner the central banks have another options it’s crazy the result for risk assets could be spectacular also with China’s long-term bonds it might be possible to see lower borrowing rates actually happening too in China remember lower rates make it easier for borrowers to have money uh for you know all kinds of different economic activities like investing in real estate which creates wealth effect which then they go up into Bitcoin obviously direct path some of this money of course does end up in crypto eventually more money in the system means more money Rising ties lift all boats for crypto right let’s not forget the Hong Kong Bitcoin ETF is not hard to imagine that additional money supply will also go to Hong Kong or more likely at the Hong Kong Bitcoin ETFs via stock connect get listed for Mainland buyers in Shanghai and Shenzhen markets now I’ve said a few times Hong Kong is very important since this is going to allow mainland China to finally have exposure to the crypto ETS five stock connect through the Shanghai and Shenzhen stock markets and I know that the amount that they can buy will be smaller when compared to what Wall Street can buy okay obviously but as it is Bitcoin miners are not producing enough Bitcoin to cater just for the us-based Bitcoin atfs remember the last two weeks they bought six times as much as miners produced so whatever amount Hong Kong buys via the mainland or just from Hong Kong itself will contribute to scarcity and let’s not forget about South Korea let’s not forget about other Asian countries that might enter the mix like Japan will Japan do a Bitcoin ETF well if everyone else is doing it maybe they will they’re coming for your Bitcoin guys especially when you consider the Chinese property markets they have been in the dumps for a very long time now which why Chinese investors have been increasingly turning towards gold like crazy they’ve been flocking to Gold like nuts in China just give those people a Bitcoin ETF man and watch the heck out the view becomes clear China floods a system with money but that money doesn’t go to property this time it goes to gold and when the Bitcoin ETF starts trading in Mainland on the Shenzhen and Shanghai markets it then goes to bitcoin as well and that could happen a lot sooner than people expect according to rumors that we’re currently hearing floating around from people in the no in China are you seeing the bigger picture yet money printing matters money printing is the tide that lifts all Financial boats and a tsunami of Asia money is coming and things will get crazier than we have even possibly imagined we have not yet seen the mega pumps in this market I hope you have your bags filled and ready thanks for watching I’ll see you in the next one

How China’s long-term bonds will affect crypto
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00:00 Introduction
00:48 What are bonds
01:56 Why is China issuing bonds
03:55 Injection of liquidity
06:19 How it affects crypto

#bitcoin #crypto #investing
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Disclaimer
Everything expressed here is my opinion and not official investment advice – please do your own research before risking your own money. Lark Davis (The Crypto Lark and affiliated brand Wealth Mastery) is not providing you individually tailored investment advice. Nor is Lark Davis registered to provide investment advice, is not a financial adviser, and is not a broker-dealer. The material provided is for educational purposes only. Lark Davis is not responsible for any gains or losses that result from your cryptocurrency investments. Investing in cryptocurrency involves a high degree of risk and should be considered only by persons who can afford to sustain a loss of their entire investment. Investors should consult their financial adviser before investing in cryptocurrency.