Chinese stock markets open higher, Bitcoin surges past 64,000! What important signals does the Chinese economy send?

FX168 Financial News Agency (Asia Pacific) reported that on Monday (October 14), China's three major stock indexes opened higher collectively, and Bitcoin soared to break through $64,000, as investors evaluated the potential impact of the economic stimulus measures announced by the Chinese Ministry of Finance over the weekend. Despite the negative premium of USDT/RMB and concerns about more funds flowing into the Chinese stock market, on-chain research shows that the USDT balance on major cryptocurrency exchanges has soared 146% to a record $22.7 billion.

Source: FX168

At the opening of the Asian market on Monday, the Shanghai Composite Index opened at 3241.43 points, up 0.74%, and the Shenzhen Component Index opened at 10118.38 points, up 0.57%. The ChiNext Index opened at 2119.39 points, up 0.88%. Real estate and securities companies rose at the top, while digital currency, cross-border payment, and commercial aerospace themes were active; retail, semiconductor, and driverless concept stocks pulled back.

Hong Kong's Hang Seng Index opened 0.11% lower, and the Hang Seng Technology Index fell 0.71%. Anta Sports fell nearly 6%, WuXi AppTec and Sinopharm Holdings fell nearly 4%, and Xpeng Motors fell more than 3%; most real estate stocks opened higher, with Midea Real Estate rising more than 7% and Vanke rising more than 5%. Bloomberg reported that volatility in China's stock market highlighted traders' cautious attitude as they waited for more details on fiscal measures.

Source: Bloomberg

Finance Minister Lan Fuan pledged new measures to support the property sector at a news conference on Saturday and hinted at more government borrowing, but gave no overall dollar figure. Higher fiscal spending is seen as key to sustaining a stock market rally sparked by central bank stimulus in late September.

"There will be consolidation and a correction in the stock market," said Wendy Liu, chief Asia and China equity strategist at JPMorgan Chase & Co. "Structural stimulus will be good for long-term investors with a 2-3 year investment target, but the short-term effect is not satisfactory."

Meanwhile, Chinese officials from various departments held another briefing on Monday to discuss increasing policy support for businesses.

Lan Fuan and his deputies said at a news conference on Saturday that local governments would be allowed to use special bonds to buy unsold homes, but did not disclose specific amounts. Secretary Lan hinted there was room for more sovereign bonds and vowed to reduce the debt burden of local governments, suggesting rare revisions to the budget could be made in the coming weeks.

Before the weekend, investors and analysts surveyed by Bloomberg expected China to roll out as much as 2 trillion yuan, or about $283 billion, of new fiscal stimulus on Saturday, including potential subsidies, consumer vouchers and financial support for families with children.

Market volatility rose before the Treasury briefing, with the CSI 300 index falling 3.3% last week. As the rebound stalled, concerns grew that the recent rally could be just another false alarm. Previously, the market had been caught in cycles of gains and losses as China's piecemeal stimulus measures brought only short-lived rebounds.

Xin-Yao Ng, investment director of abrdn Asia Ltd., said: "I suspect that the US election in November and the Federal Open Market Committee (FOMC) may postpone large-scale stimulus measures to December or later, and investors may stay away from the stock market before then and before the third-quarter earnings are released, so the upside may be somewhat limited for now."

For Bitcoin, despite concerns about the negative premium of USDT/RMB (more funds flowing into the Chinese stock market), Leon Waidmann, research director of Onchain HQ, said that the USDT balance on major cryptocurrency exchanges has soared 146% to a record high of US$22.7 billion, according to TechFlow. This substantial increase suggests that the market may soon experience a wave of strong buying power.

Source: Twitter, CryptoQuant

Waidmann noted that historically, a sharp increase in USDT reserves on exchanges often precedes a sharp market rally. High balances reflect a large amount of liquidity waiting to be deployed, which indicates that investors may soon begin to buy Bitcoin and other cryptocurrencies in large quantities.

Since stablecoins are often converted into cryptocurrencies, USDT inflows into exchanges usually indicate buying intentions.

The surge in USDT indicates growing market confidence, which may lead to increased demand for Bitcoin and altcoins in the near future.

Investors are well prepared to take advantage of favorable buying opportunities, especially when macroeconomic factors and the US election create market uncertainty.

Bitcoin Technical Analysis

FXEmpire analyst Muhammad Umair said that since March 2024, the price of Bitcoin has been consolidating in a bull flag pattern, and this consolidation indicates a broader bullish price trend.

The price lows in August and September 2024 formed a double bottom.

Currently, the price is above the 200-day moving average at $63,377. Bitcoin must break through the 200-day moving average to continue higher.

Source: FXEmpire