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China injects billions as economy slows and investors turn to crypto

As China Injects Overnight $28 Billion, Investors Turn to Cryptocurrency

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China’s latest announcement has led experts to consider investing even more in cryptocurrencies, especially Tether.

People’s Bank of China confirmed that the interest rate will be kept at 4.2%. Moreover, the government announced it would inject more than $28 billion in order to boost the economy. This money will mostly go to banks for loans.

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This decision caught off guard many investors whom some have decided to switch to Bitcoin, supposedly because it may be more stable than investments in China, where the economy is slumping.

As experts worry about China’s economy, its third quarter GDP was released. Its economy grew by 6% from a year earlier.

A consequence of the trade war

China has never ceased to have an interventionist economy, however, it is the first time that Beijing is injecting that much cash in the markets.

People’s Bank of China, the central bank of China, confirmed it would inject 200 billion Yuans – about $28 billion into its financial system. The goal is to keep bank loans at the same interest rate at 4.2% in order to sustain the economy.

For many, this move is a consequence of the trade war. On Tuesday, China’s Vice Foreign Minister Le Yucheng confirmed he had talks with the US government to halt additional US tariffs. “No country can prosper without working with other nations, Le said at the Xiangshan Forum in Beijing,” reports Reuters.

IMF forecasts China growth at 6.2%

In the meantime, the International monetary fund has lowered its forecast on China’s growth, highlighting the heavy consequences of the US tariffs weighing on the country.

“A sudden escalation in the trade dispute last month underlined the risks for the world’s second-biggest economy from higher US tariffs on billions of dollars of Chinese goods,” analyzes the Business Times.

While the IMF forecasted a growth of 6.3% in August, it also shared its concern about 2020, foreseeing growth in China at only 6%.

Read on Alvexo: “In Russia, Credit Cards Owners Reaches All-Time Debts”

Is Cryptocurrency the best solution?

In the midst of this trade war, some experts have decided to invest in Bitcoin. As the cryptocurrency is a borderless currency, it seems that Chinese experts are nurturing trust in this new monetary model.

Known for its flexibility and high adaptation, Tether cryptocurrency has started to “dominate in China”, as the Chainalysis report described.

Moreover Chainalysis’s report explains: “Tether makes perfect sense as an alternative to fiat for Chinese traders. It’s quite stable given that its value reflects that of the U.S. dollar, and can easily be exchanged for different kinds of cryptocurrencies.”

Tether is also available on the Ethereum blockchain, making it one of the most accessible and potentially stable cryptocurrencies on the market – a crucial asset for Chinese investors, who are worried about next year’s growth.

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Note: The opinions expressed in this article are the author's own and do not necessarily reflect the view of Alvexo on the matter.