Analysis: A-shares are siphoning funds from the cryptocurrency market, but the upward momentum is hard to sustain

ChainCatcher news, recently, the Chinese stock market has rebounded under the impetus of government stimulus policies, but this rise may be siphoning off funds from the crypto market, affecting the rise of cryptocurrencies like Bitcoin. Since September 24, the Shanghai Composite Index has risen by more than 20%, reaching a new high since May 2023. However, the price of Bitcoin has remained around $64,000 after China's stimulus policies, maintaining a consolidation period of $50,000 to $70,000 for six months.

Market observers point out that despite the Chinese government launching an economic stimulus plan exceeding 7.5 trillion yuan, which is widely seen as a super positive news for Bitcoin and other risk assets, the price of Bitcoin has not seen a significant increase. Danny Chong, co-founder of the Singapore Digital Asset Association, stated that this capital shift may be temporary, and once the upward trend in the Chinese stock market stabilizes, funds are expected to flow back into the crypto market.

Traditional market analysts believe that China's latest stimulus measures have not addressed fundamental economic issues and may not lead to a long-term rise in the stock market. TS Lombard noted in a report on October 2 that unless some fundamental issues, such as fixing the banks' balance sheets, are resolved, any attempts to increase lending and leverage risk-taking may fail. BCA Research also stated that the rise in the Chinese stock market may not be sustainable.