Central banks including the Federal Reserve, European Central Bank, Bank of England, and Bank of Japan, have stopped shrinking their balance sheets. This tactic, called quantitative tightening, was adopted last year to control inflation but destabilized risk assets such as cryptocurrencies. Expansion of central banks' balance sheets is considered bullish for risk assets, including bitcoin, as entities involved in financial markets are often the first recipients of newly created money. The jury is still out on whether the Fed's recent extension of loans to local lenders will result in fresh money creation. The BOJ continues to print money through bond purchases, while the Chinese credit impulse has recently bottomed out, indicating renewed credit expansion relative to the size of the economy.

(By Omkar Godbole)