Cryptocurrency analytics firm QCP Capital has released a report highlighting significant developments in global markets triggered by massive economic measures coming out of China.
According to the firm, today’s 4.15% rise in the Shanghai Composite Index (SSE) was driven by significant stimulus from the People’s Bank of China (PBoC) that marks a major turning point for markets worldwide.
The PBoC’s latest moves include a 50 basis point (bps) cut in the reserve requirement ratio (RRR) to release 1 trillion yuan of credit. In addition, a 500 billion yuan funding program aimed at supporting stock market investment has sparked optimism. Global markets, including commodities, responded positively. Brent crude rose 2.35%, while copper gained 2.32%, reflecting a potential increase in demand due to rising consumption in China.
QCP Capital also noted that this strong policy action from China follows the recent 50 basis point rate cut by the US Federal Reserve and signals a global wave of monetary easing. This trend is expected to provide strong support for asset prices in the near term, according to the report.
On the crypto front, the report shows that this bullish trend in the market has translated into a more significant increase for Ethereum (ETH) compared to Bitcoin (BTC). The ETH/BTC trading pair has risen from 0.038 on Friday to 0.0415 today, raising questions about whether confidence in Ethereum is renewed or whether this is a reflection of high volatility in an illiquid market.
QCP Capital has also observed changes in the options market, with ETH’s front-end skew shifting from puts to calls and Ethereum’s implied volatility currently trading 9% higher than Bitcoin. This suggests both positive sentiment towards ETH and expectations for increased price volatility, according to analysts.
*This is not investment advice.