The recent fiscal decisions of China and Germany are influencing the global markets, with possible repercussions also on cryptos like Bitcoin.
The increase in public spending could mitigate the restrictive effect of U.S. policies, favoring risky assets like the most famous cryptocurrency in the world.
Summary
China and Germany: the role of the Forex market in the destiny of the crypto Bitcoin
The global economies are in a phase of profound changes, and the recent fiscal moves by China and Germany are a clear demonstration of this.
With the increase in public spending by two of the world’s major economies, the financial market reacted with enthusiasm, especially in the sector of risky assets like Bitcoin.
China recently announced an increase in its fiscal deficit target, raising it from 3% to 4% of GDP. This decision is part of a broader strategy aimed at stimulating domestic demand and supporting economic growth.
According to the premier Li Qiang, the goal is to counter the impact of external challenges that China is facing in key sectors such as trade and technology.
This increase in public spending is seen by analysts as a clear sign of confidence in the country’s ability to maintain stable economic growth despite global headwinds.
In parallel, Germany has decided to abandon its traditional fiscal prudence, announcing investments of hundreds of billions of euros in infrastructure and defense.
This change represents a historic turning point for German economic policy and could provide a significant boost to the growth of the entire euro area.
According to Bloomberg economists, the increase in defense spending will have a positive cyclical effect, while the infrastructure plan could generate long-term benefits by improving the country’s productivity.
Bitcoin and markets in rally
These decisions had immediate repercussions on the financial markets. The Asian and European stock exchanges experienced a positive rally, while Bitcoin saw an increase of 3%, reaching the value of 90,000 dollars.
The sentiment of investors seems to have been influenced by the idea that higher public spending could offset potential fiscal tightenings in the United States, providing support to more volatile assets.
In addition to the direct impact on the markets, the new fiscal policies of China and Germany could exert an indirect influence on Bitcoin through the currency market.
The increase in public debt generally leads to a greater supply of bonds, reducing their price and causing yields to rise. This process, in turn, strengthens the national currency.
The yields on 10-year German government bonds increased by 36 basis points, reaching 2.73%, the highest level since November 2023.
The differential between the yields of US and German government bonds has therefore narrowed, leading to a depreciation of the dollar against the euro.
The weakening of the greenback, considered a global safe haven, has the effect of easing financial conditions at an international level and stimulating a greater risk appetite among investors.
A weaker dollar is generally seen as a positive factor for Bitcoin, as it reduces the cost of purchasing for investors operating in other currencies and stimulates demand for alternative assets.
Furthermore, a greater risk appetite in the financial markets tends to favor cryptocurrencies, perceived as high-yield speculative instruments.
Will uncertainty over fiscal policies determine the next trend?
The coming weeks will be crucial for evaluating the effects of these new fiscal policies on global markets and on Bitcoin.
If the increase in public spending in China and Germany continues to support the bull sentiment, the cryptocurrency could benefit further.
However, investors will also need to closely monitor the fiscal policies of the United States and any responses from central banks to the new economic dynamics.
Ultimately, the fiscal decisions of China and Germany represent a key factor in the current global economic landscape.
Their impact on financial markets and on cryptocurrencies, particularly Bitcoin, highlights how government policies can directly and indirectly influence the value of digital assets.
With the evolution of the macroeconomic scenario, it will be essential for investors to stay updated and adapt their investment strategies accordingly.
