Bitcoin has been stunted today as Beijing decided to hold off on new China stimulus measures aimed at supporting the economy.
Investors had widely expected China’s National Development and Reform Commission (NDRC) to outline additional stimulus measures following a Tuesday briefing after the Chinese Golden Week holiday.
Anticipation was high for a continuation of the government’s September plans, which included rate cuts and liquidity support to invigorate the slowing economy.
Instead, the briefing lacked urgency and specifics, with no new plans for further stimulus, underwhelming investors, and dented market sentiment.
According to a 10x Research report, the anticipated stimulus measures were expected to “ignite a parabolic rally in cryptocurrency prices, fueled by increasing global liquidity.”
The absence of such measures has derailed expectations of a substantial rally as Chinese markets re-opened on Tuesday, and a spill-over into crypto markets.
Consequently, the Hang Seng index posted its largest drop since 2008 and its second-largest drop since 2000 today, falling 9.41%. Meanwhile, the Bitcoin price dropped 2.86%.
U.S. Economy Bolsters ‘Uptober’ Sentiment
Although this news dampens ‘Uptober’ sentiment, October is still expected to perform well, as analysts point to concerns surrounding the U.S. economy as the primary narrative driving price action through the month.
Following stronger-than-expected jobs data, fears that last month’s dovish rate cut would be too little too late in the bid to tackle a looming U.S. recession are dissipating. The narrative suggests that a soft landing for the U.S. economy still seems achievable.
Most notably, the upcoming US Consumer Price Index (CPI) release on October 10th is anticipated to bring the next significant installment in the narrative.
The CPI forecast of 2.3%, down from the previous 2.5%, suggests a modest slowdown in inflation.
This is corroborated by the Personal Consumption Expenditures (PCE) index, another key inflation measure, which already fell to 2.2% last month, indicating a trend of decreasing inflation.
FTX Case Developments Reinforce Bullish Q4 for Bitcoin
While Bitcoin continues to range between $60K and $65K so far this October, positive developments in the FTX estate creditor repayment process keep the outlook for a bullish Q4 intact.
Nearly two years after the crypto exchange’s collapse, a US Judge approved FTX’s reorganization plan during a hearing on Monday, bringing creditor repayments one step closer. The plan will see 98% of FTX creditors receive at least 118% of the value of their claim in cash.
Some crypto market observers speculated that this could result in a flood of new money entering the crypto markets if FTX creditors choose to immediately reinvest what they receive.
According to an October 8th K33 Research report, around $2.4 billion of creditor repayments could be deposited back into the crypto market.
The report estimated that payouts would begin late this quarter and continue into early Q1 2025, within a 60-day window of the court’s effective date, which is still uncertain but expected to be in mid-November.
This adds to the suite of stacking catalysts building the case for a bullish Q4, not only anticipated to propel Bitcoin but also potentially sparking an altcoin season cited to be the “biggest” since 2017.
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