Stock Volatility Hits New Highs
China’s stock market recently experienced significant fluctuations. The blue-chip CSI 300 index saw its highest 60-day volatility since 2016, rivaling Bitcoin’s usual volatility levels.
The index initially surged over 20% after China’s central bank announced new stimulus measures. These included a 500 billion CNY ($71 billion) direct swap line, allowing financial firms to borrow against collateral to purchase equities. However, this upward momentum reversed due to concerns about the pace of stimulus implementation, leading to the steepest daily drop since 2020.
Crypto Affected by Stock Surge
The initial surge in Chinese stocks reportedly triggered FOMO-driven crypto sales. Investors, eager to profit from rising equity prices, began selling crypto assets. This trend was amplified by the Chinese Golden Week holiday, as many investors shifted their focus to traditional markets.
Asia-Based Traders Shift to Fiat
Historical data from the USDT-USD pair indicates that trading volume spikes during APAC opening hours. This suggests that many Asia-based traders are selling crypto for fiat, possibly to cover holiday expenses.
The correlation between Bitcoin and the CSI 300 has been very low over the past four years, indicating different price drivers. However, a boost in Chinese consumer confidence could positively impact both markets, potentially unlocking substantial capital from institutional and retail traders who have been waiting on the sidelines.
