Hope for Americas Crypto Market as China's Economic Struggles Intensify Amidst Fed Rate Speculation

By Omkar Godbole (All times ET unless otherwise specified) Our recent focus on the Far East has been warranted, as the latest developments in China's bond market underscore. Today, the yield on China's one-year government bond fell below 1% for the first time since the Great Financial Crisis, contributing to the year's downturn. The benchmark 10-year yield decreased to 1.7%. This situation presents two key reasons for optimism regarding risk assets like bitcoin, which experienced a slump overnight. Firstly, the continued decline in yields suggests that Beijing will need to implement more aggressive stimulus measures than those seen earlier in the year. Jeroen Blokland, founder and manager of the Blokland Smart Multi-Asset Fund, succinctly stated: “This indicates that China's economic troubles are far from over, and the government will likely increase government spending, allow for larger deficits and higher debt levels, and drive interest rates down toward zero.” Furthermore, China's situation raises questions about Fed Chairman Jerome Powell's recent concerns over interest rates, which led to bitcoin's decline from $105,000 to $95,000. As the world's factory, China is experiencing worsening deflation after the longest stretch of falling prices since the late 1990s. This could cap PPI and CPI readings globally, including in the U.S., a significant trading partner. BNP Paribas previously noted this phenomenon, with analysts stating that China has already contributed to lowering core inflation in the eurozone and the U.S. by about 0.1 percentage point and core goods inflation by roughly 0.5 percentage point. This implies that Powell's concerns about stubborn inflation may be unfounded, raising the question of whether he will stick to just two rate cuts for 2025 as implied on Wednesday. Many experts believe there may be more. “Fed concerns on inflation are misguided. Interest rates are still too high in the U.S., and liquidity is about to increase, driving Bitcoin higher,” said Dan Tapiero, CEO and CIO of 10T Holdings, on X, referencing China's declining bond yields. Currently, markets are not considering this bullish perspective. BTC has fallen below $95,000, and ETH has dropped to $3,200. All the top 100 coins are showing losses. Futures tied to the S&P 500 are down 0.5%, indicating a negative open and continuation of the post-Fed risk-off sentiment. Sentiment may worsen if the core PCE, the Fed's preferred inflation gauge, comes in higher than expected later today. This could lead markets to price out another rate cut, leaving only one on the table for 2025. Remain vigilant. Key Events to Watch Token Events Conferences Token Talk By Shaurya Malwa, Fartcoin (FART) has reached a $1 billion market cap. The AI agent token, with a name that has raised eyebrows, jumped to over $1.1 billion in market capitalization early Friday despite the broader market experiencing a second consecutive day of losses, making it one of the few tokens in the green. FART's rise is as much about human psychology as economics. In a market where fundamental investments are struggling, it has become a symbol of the absurd, a lighthearted rebellion against grim financial forecasts. The platform allows users to submit related-theme memes or jokes to earn tokens and features a unique transactional system where each trade produces a digital sound effect. People are investing not for the promise of utility or groundbreaking technology but for the joy of the moment, the shared laugh over a coin whose name alone is enough to break the tension of the day. However, it's not all about the humor. The token is part of the emerging AI agent crypto sector, which claims to use AI-powered entities to perform tasks on blockchain networks autonomously under a memecoin branding. Derivatives Positioning Market Movements Bitcoin Statistics Basket Performance Technical Analysis Crypto Equities ETF Flows Spot BTC ETFs Spot ETH ETFs Source: Farside Investors Overnight Flows Chart of the Day While You Were Sleeping In the Ether