Bullish Bitcoin Hopes Dented as China Eases Stimulus Plans

As a seasoned analyst with over two decades of market experience under my belt, I have seen bull and bear markets rise and fall, and learned to read between the lines when it comes to economic indicators. Today’s market reaction to China’s stimulus measures leaves me slightly skeptical.

On Tuesday, the momentum of the stock surge in China during September faded, as traders came back from their week-long break and resumed trading. Meanwhile, Bitcoin experienced a drop in its value during the early hours of the Asian market, likely due to broader market investors’ reactions.

In simpler terms, the diversified CoinDesk 20 index, which mirrors the largest digital coins based on their market value, experienced a decrease of 2.18% in its value.

It is anticipated that the National Development and Reform Commission (NDRC) will provide additional economic stimulus strategies during their Tuesday meeting following the Chinese Golden Week break. This announcement comes on top of the government’s previously announced measures in September, which included interest rate reductions and increased market liquidity, with the aim of boosting an economy that is experiencing a slowdown.

Anticipation ran high that a significant market surge would occur when Chinese markets resumed trading on Tuesday, with some potential impact extending to the cryptocurrency markets as well.

Despite the briefing’s relaxed tone and lack of concrete details, plus the absence of future stimulus plans, investors were left disappointed – this dampened market optimism, as worries persist over conflicts in the Middle East. Additionally, there was a strong impulse among many investors to cash in on the rally.

After a 4% surge upon opening, China’s main index, the Shanghai Composite, experienced declines throughout the trading day as investors evaluated fresh remarks. On the other hand, Hong Kong’s tech-focused Hang Seng Index dropped by almost 7%, undoing the gains it made on Monday and Friday.

Some experts predicted that a bullish trend in late September could persist due to the recent stimulus package seeming more promising than the 2015 cycle in terms of prolonging market growth. This suggests that asset prices may continue to rise for an extended timeframe.

According to Zheng Shanjie, the head of NDRC, China’s economy is currently stable and making advancements. He added that the underlying factors remain consistent, expressing optimism about reaching their projected economic expansion rate of approximately 5%. This information comes from Bloomberg.

In the meantime, crypto traders are keeping a close eye on upcoming Federal Reserve meetings happening later in the week, hoping for hints about future moves. They anticipate the release of FOMC meeting minutes and important economic data from August that indicate growth trends.