While economies all over the world are functioning at a slower pace, central banks are trying to prevent a collapse by flooding more money into their markets, with China injecting the entire Bitcoin (BTC) market cap into the system.
In other words, People’s Bank of China (PBoC) intends to increase the sum of 1.2 trillion yuan into the market, in an effort to fight the financial instability due to the Coronavirus outbreak. Crypto enthusiasts have noticed this and are preparing for stormy weather when it comes to the economic activity in the country. Coronavirus killed more than 300 Chinese people and infected another 14,350. It started at the same time the markets were closed for the lunar New Year’s holidays.
China's central bank will inject the equivalent of 21,000,000 bitcoin into their markets tomorrow.
1.2 trillion yuan = $174 billion = bitcoin's entire market cap
Everything is fine. 🙃
— Rhythm (@Rhythmtrader) February 2, 2020
The US Federal Reserve Has Injected Billions of Dollars Since September 2019
Repurchase agreements and banking bailouts are meant to increase commercial banks’ liquidity while the new money enters the system. Last year in September, the US Federal Reserve has injected billions of dollars into the US market, with President Trump also offering bonuses and tax cuts to banks and billionaires. This is the announcement made by PBoC yesterday when it comes to the 1.2 trillion yuan:
“Inject 1.2 trillion yuan via reverse repo operations on February 3 to ensure sufficient liquidity supply. The liquidity of the overall banking system will be 900 billion yuan more than the same period of last year.”
Bitcoin Comes to Solve Economic Problems
This weekend, Chinese authorities have announced 30 measures for bolstering the economy and combating the disruption caused by the Coronavirus outbreak. What a decentralized tamper proof currency with fixed inflation and a finite supply would do has been discussed very intensely too.
BTC is becoming more and more appreciated during economic adversity, with China turning to it even from before the viral outbreak. More than this, the country already has an important role in moving BTC. The central bank is only advocating the asset’s immunity to monetary manipulation.