Bitcoin strong while extreme economic crisis plagues China

Bitcoin is hovering around $43,000, while the Chinese authorities stepped into their stock market to pause trading on more than 30% of Chinese stocks. Nearly $7 trillion in value has been erased from China’s stock market.

Chinese stock market crash

Even the banning of short selling was not able to stop the crash in China’s CSI 1000 Index. In the space of just a few hours on Monday, the Index of 1000 small cap companies fell more than 8%, making this a 35% loss over the past year.

The Chinese government is responding to the situation, with President Xi working with regulators in order to stabilise the markets. However, with the demise of property leviathan Evergrande, and many other Chinese property companies on the edge of wipeout, The Chinese economy needs major stimulus to shore up the economy and stop it sliding even further into the red.

Stimulus is what bitcoin thrives on

Monetary stimulus is exactly what bitcoin thrives on. More liquidity is going to come into world markets, and this is principally from China and from the US Federal Reserve, the latter with projected rate cuts which are likely to begin as early as in Q2 of this year.

Bitcoin is coming into its next halving in April, when the miners’ block reward is halved, and the bitcoin supply gets cut by 50%. The bull run typically gets going after the halving event, and with the Fed unlocking lots of liquidity by slashing rates going into the election, it could be boom time for bitcoin.

Potential $BTC breakout

Source: Coingecko/Trading View

On the very short time frame of the hourly, $BTC looks as though it will have another go at breaking out of the triangle. Monday’s breakout turned out to be a fakeout, and so we wait to see if Tuesday will fare any better.

$44,000 on the horizon

Source: Coingecko/Trading View

Zooming out further on the daily time frame, it can be seen that $BTC is still keeping above the bull trend it has been respecting since October. With the stochastic momentum indicators curling upwards, it does look like $BTC is about to make this possible upward move. $44,000 is on the horizon.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.