Effect of Chinese Economic Crisis on Bitcoin and Cryptocurrency

Turkey’s Interest Rate Hike and Crypto Investors

In the most recent installment of Cointelegraph’s Macro Markets, analyst Marcel Pechman delved into the potential of Turkey’s recent interest rate hike luring hundreds of millions of new crypto investors, as well as the implications of China’s looming economic crisis on Bitcoin (BTC) and the digital asset space at large.

The central bank of Turkey has taken a dramatic step to combat inflation by raising the interest rate to 15%, which is a 6.5% increase. This comes in the wake of the lira declining by 80% against the US dollar in the span of five years.

Pechman believes that it is not important if the U.S. dollar remains the world’s primary reserve currency. Turkey and Argentina’s 70% inflation rate in 2022 demonstrate the potential of decentralized cryptocurrencies to be a savior for hundreds of millions, if not billions, of people who are not able to save or transact in foreign currencies.

China’s Economic Crisis and its Impact on Bitcoin

Goldman Sachs economists have reduced their projections for Chinese GDP growth to 5.4%, citing “issues stemming from the real estate market, widespread pessimism among consumers and private business owners, and only moderate policy relaxation”. The following section of the program examines if China’s economic fragility has an effect on Bitcoin and how its central bank digital currency could raise the demand for digital currencies.

Pechman demonstrates that the iShares MSCI China ETF has been a more accurate indicator of Bitcoin’s value and emphasizes the significance of the Chinese economy in worldwide expansion. Ultimately, according to Pechman, if the Chinese stock market declines, it is likely that cryptocurrency prices will be negatively affected as well.

Lastly, Pechman argues that cryptocurrency could be adopted more widely during an economic downturn, such as the slower growth in China, with stimulus payments potentially being used to purchase cryptocurrencies.

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