Overall market capital flows and attention
Competition for funds
China's stock market may attract a large amount of capital inflows under policy stimulus. For example, the creation of swap facilities and special re-loans have provided a large amount of capital support for the stock market, and the ability of institutions to obtain funds and increase stock holdings has been greatly improved. This may cause funds that originally intended to invest in the cryptocurrency market to flow to the stock market, especially some funds that pursue short-term returns and are sensitive to policies.
Investors’ focus on China’s economic policies will be on stock market-related policies, and the attention paid to the cryptocurrency market may be relatively reduced. For example, during the policy release period, market participants are more concerned about whether the A-share market has bottomed out and the impact of relevant policies on the stock market, and their enthusiasm for discussing and participating in the cryptocurrency market may weaken.
Investment sentiment and risk appetite
Emotional conduction
The expectation of a stabilization and rebound in the A-share market may convey positive investment sentiment, but this sentiment may not necessarily benefit the cryptocurrency market to the same extent. On the contrary, when the stock market shows greater appeal, investors may be more inclined to invest their funds in a policy-supported and relatively more regulated stock market environment, and the cryptocurrency market may face pressure from capital outflows due to the shift in investor sentiment.
The expectation of stability brought by stock market policies may reduce investors' preference for high-risk investments. The cryptocurrency market, due to its high volatility and uncertainty, may be regarded as an investment option with too high risk in this case, and investors may reduce their investment proportion in the cryptocurrency market.
Market supervision and compliance
Regulatory influence
China's active policy intervention in the stock market reflects its emphasis on and regulatory guidance of traditional financial markets. This may further strengthen the regulatory authorities' regulatory attitude towards financial markets. The cryptocurrency market, as a relatively unregulated and high-risk area, may face stricter regulatory scrutiny. For example, restrictions and supervision on cryptocurrency transactions may be strengthened to prevent excessive capital from flowing into the cryptocurrency market and maintain financial market stability.
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