Despite a strong start to Tuesday, the Chinese stocks came crashing down as the country’s top economic planner held back its plans to unleash further stimulus. As of press time, the Hand Seng Index (HSI) is trading 7% down, marking its biggest single-day fall since the 2008 financial crisis. Bitcoin and altcoin investors are watching the development closely in the hope of capital rotation back into crypto.
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Chinese Stocks Crack After A Week of Rally
In the last three weeks, the Chinese stock market made massive gains following the $140 billion announced by the People’s Bank of China (PBoC) in mid-September. These desperate economy-boosting measures by the central bank sent the Chinese stocks soaring with the entire stock market gaining 34% in just three weeks.
However, during the same time, other Asian markets saw huge FII withdrawals as money flowed into the Chinese market at a rampant pace. A similar scenario was visible for Bitcoin and altcoins as well which saw a dull start to the month of October pouring cold water over the much-anticipated ‘Uptober’ rally.
However, now that Chinese stocks have lost momentum, investors are curious as to what will be the next development, and whether will capital flow back into BTC and altcoins leading to a rally ahead. As per the latest CoinGape report, the Bitcoin price is gearing up for a new all-time high in October.
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On the other hand, the World Bank expects China’s growth to weaken going ahead in 2025. In its semi-annual report, the global lender said that China’s economic expansion will drop to 4.3% next year, down from the estimated 4.8% in 2024. In a report on Tuesday, the World Bank noted:
“For three decades, China’s growth has spilled over beneficially to its neighbors, but the size of that impetus is now diminishing. Recently signaled fiscal support may lift short-term growth but longer-term growth will depend on deeper structural reforms.”
The World Bank noted that in addition to slowing growth in China, shifting trade and investment patterns, along with increasing global policy uncertainty, could impact the East Asia and Pacific region.
