It appears that the central banks of the world's top economies have all reached the bottom of their quantitative tightening. Accordingly, their cumulative balance sheets have flattened out, signaling a potential recovery for financial markets and in turn, cryptocurrencies. This hypothesis is backed by the findings reported in The Market Ear, which also suggested that this shift could be inferred as a "tailwind" for markets.

The infusion of newly created money as a result of balance sheet expansion greatly impacts financial assets and cryptocurrencies. This is due to the Cantillon Effect, which states that entities in the market are the first to be provided with the monetary stimulus, thus further fuelling asset appreciation. The recent reinstatement of lending activities by the Federal Reserve may not necessarily lead to money creation. On the other hand, the Bank of Japan has seen its efforts to purchase bonds boosted, which may lead to further inflation and money creation. Lastly, the reduction of the credit impulse seen in China is viewed as a sign of economic stimulus in the region.

In conclusion, it is highly likely that the central banks have reached their threshold for quantitative tightening and have started to flatten out their balance sheets. This change in policy could potentially be favorable for the risk markets and have a positive effect on cryptocurrencies. It is important to note that the outcomes for each region are markedly different, with some countries exhibiting a slower response time than others. Therefore, the results of this new policy are highly dependent on a variety of economic and political factors in the context of each country.



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