Bullish Bitcoin Hopes Dented as China Eases Stimulus Plans
2024-10-08

A September rally in Chinese stocks fizzled Tuesday as traders returned to the market following a weeklong holiday, with bitcoin {{BTC}} sliding in early Asian hours as broader market investors reacted.
Bitcoin dropped as low as $62,000 in late U.S. hours Monday before rising to $62,700 in early Asian hours to pare nearly all gains over a seven-day period. Majors tokens Solana's SOL {{SOL}}, ether {{ETH}}, XRP {{XRP}} and BNB {{BNB}} fell up to 4%, paring Monday's gains.
The broad-based CoinDesk 20 (CD20), a liquid fund tracking the largest tokens by market capitalization, lost 2.18%.
Investors widely expected the National Development and Reform Commission (NDRC) to outline more stimulus measures in a Tuesday briefing after the Chinese Golden Week holiday, adding to the government’s September plans of rate cuts and liquidity support for the market to rile up a slowing economy.
There were expectations of a big rally when Chinese markets re-opened on Tuesday, part of which could spill over to crypto markets.
However, the briefing’s general lack of urgency and specifics, and no plans for further stimulus underwhelmed investors - denting market sentiment as concerns around conflicts in the Middle East remain. At the same time, many felt an urge to take profit from the rally.
China’s premier index, the Shanghai Composite, jumped 4% after opening but fell through the day as investors digested new comments. Hong Kong’s tech-heavy Hang Seng fell nearly 7%, reversing gains from Monday and Friday.
Some analysts previously warned of a late September rally having legs to keep the momentum going, as the latest stimulus appeared sanguine compared to the 2015 cycle, which buoyed asset prices for a longer period.
As such, NDRC Chairman Zheng Shanjie described China’s economy as “stable” and showing “progress,” saying fundamentals are unchanged and there’s confidence in meeting its economic growth target of around 5%, per Bloomberg.
Meanwhile, crypto traders continue to look to Federal Reserve meetings scheduled for later this week for clues on further positioning. The agency is expected to release FOMC minutes and key economic figures from August that track growth.