On Monday (October 14), China's three major stock indexes opened higher, and Bitcoin soared above $64,000 as investors assessed the potential impact of the economic stimulus measures announced by the Chinese Ministry of Finance over the weekend. Despite concerns about the negative premium of USDT/RMB and more funds flowing into the Chinese stock market, on-chain research shows that the USDT balance on major cryptocurrency exchanges has soared 146% to a record high of $22.7 billion.
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At the opening of the Asian market on Monday, the Shanghai Composite Index opened at 3241.43 points, up 0.74%, and the Shenzhen Component Index opened at 10118.38 points, up 0.57%. The ChiNext Index opened at 2119.39 points, up 0.88%. Real estate and securities companies rose at the top, and digital currency, cross-border payment, and commercial aerospace themes were active; retail, semiconductor, and driverless concept stocks pulled back.
Hong Kong's Hang Seng Index opened 0.11% lower, and the Hang Seng Technology Index fell 0.71%. Anta Sports fell nearly 6%, WuXi AppTec and Sinopharm Holdings fell nearly 4%, and Xpeng Motors fell more than 3%; most real estate stocks opened higher, with Midea Real Estate rising more than 7% and Vanke rising more than 5%.
Volatility in Chinese stocks highlights traders’ caution as they await more details on fiscal measures, Bloomberg reported.
Chinese Finance Minister Lan Foan pledged new measures to support the property sector at a news conference on Saturday and signaled more government borrowing but gave no overall dollar figure. Higher fiscal spending is seen as key to sustaining a stock market rally sparked by central bank stimulus in late September.
Wendy Liu, chief Asia and China equity strategist at JPMorgan Chase & Co., said: "There will be consolidation and correction in the stock market. Structural stimulus measures will be of great benefit to long-term investors with a 2-3 year investment target, but in the short term, the effect is not satisfactory."
Meanwhile, Chinese officials from various departments held another briefing on Monday to discuss increasing policy support for enterprises.
Lan and his deputies said at a news conference on Saturday that local governments would be allowed to use special bonds to buy unsold homes, but did not disclose the exact amount. Secretary Lan hinted there was room to issue more sovereign bonds and vowed to reduce the debt burden of local governments, suggesting that rare budget revisions could be made in the coming weeks.
Before the weekend, investors and analysts surveyed by Bloomberg expected China to roll out as much as 2 trillion yuan, or about $283 billion, in new fiscal stimulus on Saturday, including potential subsidies, consumer vouchers and financial support for families with children.
Market volatility had risen before the Treasury briefing, with the CSI 300 index falling 3.3% last week. As the rebound stalls, concerns are growing that the recent rally could be just another false alarm after the market was caught in a cycle of gains and losses as China's piecemeal stimulus measures brought only short-lived rebounds.
“I suspect the U.S. election in November and the Federal Open Market Committee (FOMC) may delay large-scale stimulus measures until December or later, and investors may stay away from stocks before then and before third-quarter earnings, so upside may be somewhat limited for now,” said Xin-Yao Ng, investment director at abrdn Asia Ltd.
As for Bitcoin, despite concerns about the negative premium of USDT/RMB (more funds flowing into the Chinese stock market), according to TechFlow, Leon Waidmann, research director of Onchain HQ, said that the USDT balance on major cryptocurrency exchanges has soared 146% to a record high of $22.7 billion. This substantial increase indicates that the market may soon experience a wave of strong purchasing power.
Waidmann pointed out that historically, a sharp increase in USDT reserves on exchanges often precedes a sharp market rally. High balances reflect a large amount of liquidity waiting to be deployed, which indicates that investors may soon begin to buy Bitcoin and other cryptocurrencies in large quantities.
Since stablecoins are often converted into cryptocurrencies, USDT inflows into exchanges often indicate buying intent.
The surge in USDT indicates growing market confidence, which could lead to increased demand for Bitcoin and altcoins in the near future.
Investors are well-positioned to take advantage of favorable buying opportunities, especially as macroeconomic factors and the U.S. election create market uncertainty.
Bitcoin Technical Analysis
FXEmpire analyst Muhammad Umair said that Bitcoin's price has been consolidating in a bull flag pattern since March 2024, and this consolidation indicates a broader bullish price trend.
The price lows in August and September 2024 formed a double bottom.
Currently, the price is above the 200-day moving average at $63,377. Bitcoin must break above the 200-day moving average to continue moving higher.
