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The PBoC’s liquidity injection as well as the housing market boost may drive asset prices up.
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U.S. The widening yield curve reflects a growing optimism about economic recovery and growth.
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Justin Sun predicts that China’s economic actions will have a positive impact on the crypto market.
The People’s Bank of China and the US Federal Reserve add liquidity to the market. This increases the hopes for asset prices to rise. This positive environment is likely to benefit crypto markets as digital economies are expecting more financial easing.
Along with its positive outlook, PBoC also took strong measures to address the slowing economy in the country, especially on its housing and equity market. The PBoC announced policies on Monday to support the housing market and increase liquidity in its asset market.
These proactive measures led to a significant increase in mainland Chinese and Hong Kong indexes. The 500 billion RMB swap facility was a key measure. Previously, it was only available to national banks. Now, non-bank financial institutes can purchase Chinese shares.
Read Also: Justin Sun Thinks China will Spark a Crypto Bull Run — Here’s Why
PBoC Reduces Lending Rate
The PBoC also reduced the rate of medium-term lending facility loans (MLF) from 2.30% down to 2.00%. This move has allowed the PBoC to liquidate 300 billion yuan (42.66 billion dollars) in the market. The central bank explained this adjustment would make monetary policies more transparent and address long-term funding requirements of financial institutions.
Read Also: China’s Crypto Clampdown Continues: PBOC Appointee Dashes Hopes
In the United States, an increasing 2s10s spread, which is currently at 21 basis point, indicates growing confidence in economic expansion. This spread, which represents a difference between the yields on US Treasury bonds of two and ten years, has increased by forty points in the past month.
Justin Sun, the founder of Tron, stated that China has already injected liquidity into its economy before the U.S. This could have an impact on the crypto market.
Sun made headlines in the past with his predictions about China’s involvement in the crypto-space. Sun’s comments are attracting investors’ attention, even though there is no official word about China reversing the ban on crypto assets.
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