Bitcoin Surges as China Stimulus Boosts Markets

Bitcoin jumped to a seven-day high late Sunday evening, reaching $64,300, as Asian stocks displayed mixed reactions following China’s announcement of new economic stimulus measures. The world’s largest cryptocurrency gained 2.5% on the day, marking its highest level since October 7, driven by positive market sentiment following China’s promise to “significantly increase” its debt to support its weakening economy.

China’s Economic Stimulus and Market Response

Over the weekend, China’s central government vowed to introduce stimulus measures but provided no specific details regarding the size or scope of the package. This uncertainty left investors guessing about the long-term impact on the country’s stock market, yet short-term optimism was evident as the Shanghai Composite Index rose 1.6%.

Other Asian markets saw mixed results. Hong Kong’s Hang Seng Index slipped by 0.4%, while Japan’s Nikkei 225 climbed 0.57%, buoyed by gains in tech stocks. Meanwhile, markets in South Korea and Australia remained relatively stable.

Bitcoin’s Price Reaction

Bitcoin’s price rally comes after a similar surge last month when China injected $113 billion of liquidity to support its stock market. Along with the liquidity boost, China also slashed reserve requirements for banks and eased regulations for second-home purchases, leading to a 20% rise in the Shanghai Composite over the past month.

Though Chinese stocks have underperformed compared to their U.S. counterparts, with a 6.7% gain compared to the S&P 500’s 34.3% increase over the last year, the recent stimulus promises could push more capital into the crypto market.

Global Economic Tailwinds for Bitcoin

Experts suggest China’s continued stimulus measures, combined with shifting U.S. economic data and upcoming events like the presidential election and FTX bankruptcy payouts, could provide further tailwinds for Bitcoin in the months ahead.

Notably, U.S. labor market data exceeded expectations in early October, with nonfarm payrolls rising by 254,000—far above the forecast of 170,000. This strong employment growth has raised concerns that the Federal Reserve may delay its planned rate cuts, as robust labor markets tend to fuel inflation. However, inflation has shown signs of cooling, with core Consumer Price Index (CPI) rising by 3.3%, slightly above expectations but well below peak levels.

Bitcoin’s recent surge reflects growing optimism in global markets, fueled by China’s stimulus measures and improving macroeconomic data in the U.S. While uncertainties remain, particularly around the size and impact of China’s stimulus, the broader environment appears favorable for further crypto gains as investors navigate economic shifts and policy changes across the globe.