Key Points
- Chinese stocks’ rally has slowed, sparking speculation of a shift to Bitcoin and crypto trading.
- The waning Chinese stock rally could potentially boost Bitcoin, according to QCP Capital.
The recent rally in Chinese stocks has reportedly caused some crypto investors to shift their focus. However, the rally has slowed after a disappointing stimulus package, leading to speculation that investors might return to Bitcoin and crypto trading.
Stimulus Package Disappointment
In late September, Asian stocks experienced a surge due to robust Chinese government stimulus packages and expectations that these policies could continue into 2024. However, markets were disappointed when the expected $1.4 trillion fiscal package turned out to be only a $14 billion package. This caused Chinese stocks to lose some of their recent gains.
The Impact on Bitcoin and Crypto Trading
A recent Bloomberg report suggested that the rally in Chinese stocks may have led some crypto investors to reallocate their capital to these equities. This was indicated by the discount of Tether’s USDT relative to the U.S dollar since late September. Some experts believe this could signal “panic buying” of Chinese stocks.
With the Chinese equity market rally slowing, there is speculation that investors may shift their focus back to Bitcoin and crypto trading. Singapore-based crypto trading firm QCP Capital suggested that the waning Chinese stock rally could boost Bitcoin, as the crypto industry matures as an alternative risk-on asset.
However, the firm also noted potential downside risks, such as the upcoming earning season and September US CPI data scheduled for 10 October. These factors could complicate the crypto market’s outlook.
Meanwhile, the BTC Korean Premium Index formed a V-reversal pattern at press time, suggesting little Korean demand for the asset. At the time of writing, Bitcoin was valued at $62.5k, down about 1% on the weekly charts.