Developments in China Boost Risk Appetite and Top Crypto Assets

NEW YORK, NEW YORK, USA, June 6, 2022 / — ALT 5 Sigma Inc., a global fintech that provides next-generation blockchain-powered technologies for tokenization, trading, clearing, Settlement, Payment and Custody of Digital Data Instruments publishes its Digital Assets Morning Call.

• Developments in China on covid, pricing and tech support, improved risk appetite

• Major crypto assets have rebounded but remain within well-defined ranges

Risk appetite picked up at the start of the week, driving the prices of major crypto tokens higher. Several China-related developments have been instrumental in improving sentiment in financial markets.

China eases covid restrictions

First, China is easing covid-related restrictions in most areas of Beijing, underscoring material progress in tackling the latest wave of covid infections. The immediate result is that it will stimulate economic activity by reducing the economic burden of restrictions and China’s zero covid policy.

US could cut Chinese tariffs

Second, the United States is considering lifting tariffs on some Chinese imports to help reduce inflationary pressures. Commerce Secretary Raimondo made the comments to CNN on Sunday. The idea that the US authorities could take measures to help counter inflationary pressures is giving a boost to market sentiment, although the extent and real impact of these measures remains to be determined.

China’s tech crackdown could end

Third, China is close to concluding its investigation into Didi, Full Truck Alliance and Kanzhun, according to a Wall Street Journal article. Recall that Beijing launched an investigation / crackdown on these technology companies last summer, after their IPO in the United States. The move put pressure on Chinese stock prices overall and significantly reduced risk appetite last year. Therefore, the conclusion of these investigations now is seen as positive by the financial markets.

Macro challenges remain daunting

It is important to note that while these developments may contribute to a near-term rebound in market sentiment – ​​and help crypto prices in the process – there is still a great deal of uncertainty about the trajectory of the broader macro outlook. For example, overnight it was reported that China’s (unofficial) Caixin Services PMI fell from 36.3 in April to 41.4 in May, weaker than expected and well below the 50% boom/bust level that separates and expands an economy from a contracting one.

US inflation data later this week

Last week’s US jobs report highlighted continued tight labor market conditions, which is positive for economic growth but also for inflation. Later this week, the US CPI report for May is due and should show only a modest deceleration in inflation to 8.2% from 8.3% in April. Such an outcome should maintain the Fed’s resolve to tighten monetary policy more aggressively, and most expect a 50 basis point rate hike at the next FOMC meeting on June 14-15.

On the cards

Meanwhile, bitcoin and ether have rebounded from weaker levels evident at the end of last week, but both remain within the reasonably well-defined trading ranges established since mid-May. Bitcoin pulled back above $30,000 with short-term resistance at last week’s highs at $32,000 and just above. Ether rebounded from threatening potentially key support in the $1,700 area but, at current levels near $1,900, it remains below psychological resistance at $2,000.

Robert Lynch
Research and Strategy Manager
ALT 5 Sigma Inc.
[email protected]


ALT 5 Sigma is a global fintech that provides next-generation blockchain-powered technologies for trading, clearing, settlement, payment and safe custody of digital instruments. ALT 5 was founded by specialists in the financial sector out of the need to provide the digital asset economy with security, accessibility, transparency and compliance. ALT 5 offers its customers the ability to buy, sell and hold digital assets in a safe and secure environment deployed with financial industry best practices. ALT 5 Sigma’s products and services are available for banks, brokers, funds, family offices, professional traders, retail traders, digital asset exchanges, digital asset brokers, developers blockchain companies and financial information providers. ALT 5’s digital asset custodian services are secured by Fireblocks.

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