BCA Research: China's economic stimulus measures are insufficient to support Bitcoin in establishing a bull market

ChainCatcher message, BCA Research believes that the rise in risk appetite may not be sustained, as China's latest stimulus measures have failed to generate a significant bullish "credit impulse" like in the past two decades (including 2015). Between 2000 and 2020, when the Chinese real estate market was booming, there was potential to introduce an exponential credit curve into the real estate and construction boom. However, now, due to the lack of alternative productive uses for credit of the same scale, it will be difficult to generate the same massive credit impulse.

It is reported that the credit impulse refers to the percentage of new credit flows issued through loans and other debt instruments relative to the Gross Domestic Product (GDP). Since the 2008 financial crisis, analysts have closely monitored China's credit impulse as a leading indicator of global economic growth and a rebound in risk appetite. Historically, the resurgence of this indicator has coincided with the bottoming of the Bitcoin bear market.

During the last major bullish easing cycle in 2015, the credit shock peaked at 15.5 trillion yuan, equivalent to 15% of GDP. At that time, the Chinese stock market, represented by the CSI 300, more than doubled in six months, while Bitcoin bottomed around $100, subsequently rising in a two-year bull market and peaking near $20,000 in December 2017.