The recent economic stimulus packages announced by the Chinese government have revitalized the long-ailing stock market. However, this resurgence appears to have negative implications for the cryptocurrency market, according to some experts. One of the factors limiting the rise of Bitcoin 
$96,374 and other cryptocurrencies in Asia may be the shift of capital towards Chinese stocks.
The Rise of Chinese Stocks Affects Cryptocurrency Market
Recently, the Chinese stock market experienced a strong recovery. Notably, the Shanghai Composite Index has risen over 20% since September 24, reaching its highest level since May 2023. Similarly, the Hang Seng China Index, which includes Chinese stocks listed in Hong Kong, has seen an increase of more than 25%. This surge followed the announcement of a significant stimulus package by the Chinese government, which included interest rate cuts, liquidity support for banks, and promises to stabilize real estate prices. However, it seems that some of this capital inflow is being withdrawn from the cryptocurrency market.
Capital May Return to the Cryptocurrency Market
On the other hand, some experts believe this situation is temporary. Danny Chong, one of the founders of the Digital Assets Association Singapore, stated that the capital shift would not last long and that investors would return to cryptocurrencies once market activity in China calms down. Chong noted, “Investors are attempting to maximize profits by transitioning between asset classes. We may see capital return to the cryptocurrency market when Chinese stocks reach their peak.”
However, traditional market analysts argue that the recent incentives from the Chinese government may not have lasting effects. They suggest that unless fundamental economic issues are addressed, these measures will remain limited. Concerns have been raised that without rectifying the damaged balance sheets of banks, the sustainability of these incentives in the long term is questionable.
Therefore, warnings have been issued that the current rise could be a short-term movement and may not be sustainable unless the underlying economic challenges in China are resolved.
