Chinese stocks lose momentum as economic planners remain uncertain about further stimulus. Will money flow into Bitcoin and altcoins?

Highlights

  • The Hang Seng Index (HSI) fell 7%, its biggest one-day drop since the 2008 financial crisis.

  • As China’s stock market loses momentum, investors are speculating whether capital will flow back into the cryptocurrency market.

  • The World Bank predicts that China's economic growth will slow down, falling to 4.3% by 2025.

Despite a strong start on Tuesday, Chinese stocks subsequently plunged as the country’s top economic planner delayed further stimulus. At press time, the Hang Seng Index (HSI) was down 7%, its biggest one-day drop since the 2008 financial crisis. Bitcoin and altcoin investors are closely watching the developments, hoping that capital will flow back into cryptocurrencies.

China stocks crash after week of gains

Over the past three weeks, Chinese stocks have surged after the People’s Bank of China (PBoC) announced in mid-September that it would inject $140 billion into the market. These emergency economic stimulus measures by the central bank sent Chinese stocks soaring, with the entire stock market rising 34% in just three weeks.

However, at the same time, other Asian markets also saw massive FII withdrawals as funds poured into the Chinese market at an alarming rate. A similar situation was seen with Bitcoin and altcoins, which had a lackluster start to October, pouring cold water on the much-anticipated “Uptober” rally.

However, now that the Chinese stock market has lost momentum, investors are curious about what will happen next and whether capital will flow back into BTC and altcoins, sparking a future rally. According to the latest CoinGape report, Bitcoin price will hit a new all-time high in October.

On the other hand, the World Bank expects China’s economic growth to weaken in 2025. The global bank said in its semi-annual report that China’s economic expansion rate will slow to 4.3% next year from an estimated 4.8% in 2024. In a report on Tuesday, the World Bank noted:

“For three decades, China’s growth has had spillover effects on its neighbors, but that impetus is waning. Recently hinted at fiscal support may boost short-term growth, but long-term growth will depend on deeper structural reforms.”

The World Bank noted that in addition to China's slowing economic growth, shifts in trade and investment patterns and increased global policy uncertainty are also likely to affect the East Asia and Pacific region.

BTC price once again encountered resistance at $64,000 and is currently down 2% below $62,500. However, market analysts pointed out that despite the volatility, Bitcoin is still holding on to bull support.

On the other hand, altcoins have been rising in tandem with Bitcoin, with Ethereum and other currencies at key support levels. Here is a list of the most exciting altcoins to watch in October 2024.