Chinese authorities are contemplating a 2 trillion RMB ($278 billion) plan to revitalize the struggling stock market. Despite this effort, the impact hasn’t reflected on the price of bitcoin (BTC), which, as of now, is down 2.3%, hovering below $40,000, according to CoinDesk indices data. The CoinDesk 20 Index (CD20) is also down 2.5% by mid-day Hong Kong time.
Reports suggest that Beijing plans to utilize state-owned enterprises’ offshore accounts and local funds for onshore share investments through the Hong Kong exchange link and other yet-to-be-disclosed measures. While local stock market indices, such as Hong Kong’s Hang Seng index (up 2%) and the CSI 300 (up 0.15%), responded positively, the Hang Seng index has faced a 31% decline over the past year, and the CSI is down 23%.
The strategy involves injecting offshore funds into the mainland stock market to enhance liquidity and confidence. Additional support measures, pending top leadership approval, include regulatory changes and financial interventions, according to Bloomberg.
Bitcoin’s market dynamics appear more influenced by inflows into exchange-traded funds (ETFs) and substantial outflows from the Grayscale Bitcoin Trust (GBTC). Some analysts also highlight the potential impact of measures by the People’s Bank of China to support the yuan amid a stock market decline and a stronger dollar, given bitcoin’s inverse correlation with the USD.
While there are concerns that China aims to control BTC to maintain currency stability, others remain optimistic. Greta Yuan, Head of Research at VDX in Hong Kong, believes that the rebound of the Chinese economy will have positive implications globally. Any stimulus or accommodative policy is seen as encouraging for investors, and the crypto market may perceive such policies as risk-on, fostering innovation and market expansion.
Meanwhile, India has surpassed Hong Kong to become the world’s fourth-largest stock market, fueled by robust corporate earnings in the country.
