Bitcoin is due to ‘capital flight’ as China ends stimulus – analysis
Bitcoin and crypto should see a new surge in liquidity despite China ending economic stimulus, according to an analysis.
On October 8, trading firm QCP Capital predicted a “capital reallocation” to crypto markets in an announcement to Telegram channel subscribers.
Bitcoin, crypto moves from China stand to get
Bitcoin (BTC) price action was carried over to the Oct. 7 daily near-term as geopolitical tensions combined with news that China would not take further stimulus measures – a disappointing result for risk assets.
BTC/USD briefly dipped below $62,000 ahead of October 8 Wall Street as US stock futures eased.
BTC/USD 1-Hour Chart. Source: TradingView
Despite what he calls “near-term downside risks” for stocks due to falling US macro data this week, QCP sees conditions improving for crypto of late.
“As the Chinese rally slows, we expect capital to return to crypto, the industry's growing maturity as an alternative risk asset,” he said.
It reflects the more optimistic outlook held by crypto market observers regarding the rest of October and Q4.
As Cointelegraph reports, some still see Bitcoin delivering strong returns on its classic “Uptober” performance, while global liquidity trends should similarly strengthen risk assets by the end of the year.
“We see downside risk to equities due to the upcoming earnings season and CPI release, which could challenge their lofty valuation. Geopolitical tensions further complicate the outlook,” QCP said.
However, we maintain medium-term optimism, expecting election headlines to continue driving crypto activity.
USD BTC Price Drops “Reality Check”
Given the strength of the BTC price in general, traders have widely observed caution on lower timeframes.
Related: “Moving Palm Definition” – 5 Things to Know in Bitcoin This Week
China's decline lifted the US dollar index (DXY), typically a headwind for crypto performance, and pressured US stocks.
US Dollar Index (DXY) 1-day chart. Source: TradingView
Noting the strong weekend performance for BTC/USD, prominent trader Bluntz told his followers in part in a post on X: “Gut these early weeks are telling crypto pumps can be a trap.
“I took a good look at dxy and es today and gave myself a little reality check.”
BTC/USD 12-hour chart. Source: Bluntz/X
The DXY, which earlier in the month traded at its lowest level since July 2023, stood at 102.37 at the time of writing, up 1.6 percent on a monthly basis.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
