Mr Viral
China’s fiscal stimulus package has positively impacted Bitcoin ($BTC) and Asian stock markets.
Analysts believe a $BTC rally is imminent as it nears the final stage of post-halving consolidation.
However, investor sentiment is mixed due to $BTC’s underwhelming performance and ambiguous technical indicators.
$BTC recorded a 2.6% 24-hour rise, spurring a minor increase in broader crypto market trading activity. While $BTC had been struggling to break above the $65K resistance zone since September 30, analysts believe a rally is imminent.
China’s weekend quantitative easing could have boosted $BTC along with Chinese equities. However, the end of the post-halving consolidation phase is a more likely cause for $BTC’s bullish momentum.
Will $BTC finally reach $100K, and what does China have to do with its performance? Let’s zoom in.
China’s Struggles Benefit $BTC
China’s Finance Minister, Lan Fo’an, announced a fiscal stimulus package this Saturday. The plan involves the central bank buying government bonds to increase the circulating money supply, a practice known as quantitative easing.
As a result, the SSE Composite Index, tracking the performance of all stocks traded on the Shanghai Stock Exchange, rose by 2.07% in the past 24 hours. But beyond the anticipated effect on Asian stock markets, Chinese fiscal stimulus benefited crypto.
$BTC jumped to a weekly high of $64.2K with a 2.6% 24-hour increase. Other tokens also recorded gains:
Why? Stimulus initiatives from major economies often trigger risk-on sentiment. Last month, China’s $113B liquidity injection into ailing stocks and the Fed’s 0.5% interest rate cut drove $BTC to $65K.
However, there’s more to crypto’s rise than meets the eye. Investors often use alternative assets as a hedge against economic turmoil.
Official data shows the US inflation is at its three-year low, declining consistently since March. Yet the country’s massive debt and understated CPI calculations suggest the reality isn’t as bright.
Meanwhile, China’s weekend stimulus aims to combat its longest deflation since the 1990s. Prices have been falling for five consecutive quarters, driving down investment into stocks and consumer spending.
Despite its volatility, crypto may be a more appealing hedge for Chinese investors than real estate, which has consistently fallen since Q3 2021, or commodities, most of which have declined throughout October.
Bitcoin’s Halving Hangover – Will It Recover?
Traditional financial markets do have an impact on crypto. However, we shouldn’t neglect internal forces, which have a more direct impact on trader sentiment and token performance.
Pseudonymous crypto analyst Inmortal suggests $BTC is mirroring its October 2023 price trend, preceding a rise from $34K to an all-time high of $71K in March.
Historically, halving events, which cut the number of new tokens mined in half, boost $BTC value through scarcity. The effect tends to be most pronounced after 100 days.
The last $BTC halving happened on April 20, 2024. Analysts predicted $BTC to hit $100K soon after (particularly given its new ATH), but something went terribly wrong. On July 29, the 100th day after halving, $BTC traded at $68K.
Now, Inmortal believes $BTC is at the final stage of post-halving consolidation.
Could the macroeconomic downturn have slowed the halving impact? Maybe. It also may be that this year’s halving failed to achieve its goal, and analysts were wrong.
Kiyosaki’s Prediction – Attention Grabbing or a Real Possibility?
In a prediction as clickbaity as Trump’s third assassination attempt, Robert Kiyosaki says $BTC may crash to $5K.
Kiyosaki is right that high gold prices often indicate a pessimistic outlook and a stock market crash may drag crypto down. We saw it happen in August.
Still, the current $BTC performance implies a slump is unlikely. Technical indicators show a weak positive short-term trend and a weak negative trend for the long term.
In light of the upcoming US election and uncertain economic conditions, $BTC could go in either direction.
$BTC’s bullish momentum likely has to do with a combination of factors rather than one specific catalyst.
Halving, China’s fiscal stimulus, never-ending discussions by political leaders, and growing institutional adoption all play a role in $BTC’s price action.
$BTC may hit a new ATH or drop to an eight-year low. But what are the odds?
References
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