Altcoins Await China Stimulus Amid Recession Fears and Shifting Liquidity Trends

Altseason’s potential to thrive hinges on whether China’s central bank introduces fresh economic stimulus and how investors react to looming recession risks. Analysts and market participants are closely monitoring developments, as China’s monetary policy remains a pivotal factor in the broader global liquidity landscape [1].

China’s central bank has the ability to inject liquidity into the economy through measures such as rate cuts or tailored financing programs, effectively boosting the money supply. Such actions historically benefit high-risk assets like equities and cryptocurrencies. With China contributing 19.5% to global GDP, its policy moves carry significant weight, despite the United States Federal Reserve often dominating market narratives [1].

Recent economic data from China paints a mixed picture. July retail sales declined by 0.1% from the previous month, while fixed-asset investment dropped 5.3% year-over-year—the sharpest decline since March 2020. Industrial production growth slowed to 0.4%, and the urban unemployment rate rose to 5.2%. These figures suggest a weakening domestic economy that could justify new stimulus measures [1].

Several analysts have weighed in on the likelihood of such action. Bloomberg Economics analysts Chang Shu and Eric Zhu anticipate potential stimulus from the People’s Bank of China as early as September. Economists at Nomura and Commerzbank also believe stronger policy support is inevitable, though the timing remains uncertain [1].

However, even if China implements stimulus, global investor sentiment must align for altcoins to see a meaningful upturn. Rising recession fears could lead to a shift in capital toward safer assets like U.S. Treasuries. Yet, the latest U.S. consumer sentiment survey from the University of Michigan revealed that 60% of Americans expect rising unemployment, a level not seen since the 2008–09 financial crisis. Despite these concerns, markets have remained resilient, with the S&P 500 hitting record highs and 5-year Treasury yields rising to 3.83%—a sign of reduced risk aversion among investors [1].

Higher Treasury yields can signal a more confident market, as investors are willing to accept lower returns for perceived safety. This shift has opened the door for a potential rebound in the altcoin market. If Chinese monetary policy becomes more accommodative, it could act as a liquidity catalyst, encouraging a reallocation of capital into riskier assets such as cryptocurrencies [1].

Historically, Bitcoin has shown a strong correlation with global liquidity. A 2025 report from 21Shares noted that Bitcoin’s price exhibited a 94% correlation with liquidity trends, outperforming both the S&P 500 and gold. This suggests that if global liquidity expands—potentially through Chinese stimulus—altcoins could see renewed interest [1].

The global monetary base remains a key indicator of liquidity. The U.S. leads with $5.8 trillion in M0, followed by $5.4 trillion in the eurozone, $5.2 trillion in China, and $4.4 trillion in Japan. China’s position as a major contributor to global liquidity means that any expansionary policy could ripple through international markets, including cryptocurrency [1].

Still, investors remain cautious. Even if the PBOC moves to ease, broader global economic concerns may temper enthusiasm. For now, altseason’s next phase appears to be a delicate balancing act between policy action and market sentiment [1].

Source: [1] Altseason’s next step depends on China stimulus, investors’ response to recession fears (https://cointelegraph.com/news/altseason-s-next-step-depends-on-china-stimulus-investors-response-to-recession-fears)