On October 8th, the three major stock indexes of A-shares opened with a collective surge. The Shanghai Composite Index rose more than 10%, surpassing the 3500-point mark. The Shenzhen Component Index rose more than 10%, and the ChiNext Index soared by over 16%. Over 5000 stocks in the two markets and the Beijing Stock Exchange experienced gains, with multiple stocks in the real estate sector opening at their limit-up prices.
The hot A-share market has also attracted a large number of new investors. According to reports, during the National Day holiday, at least 60 offline branches of securities firms arranged for staff to be on duty, and online account opening services provided uninterrupted support 24/7. Market data shows that since the introduction of the combination of policies on September 24th, the three major A-share indexes have continuously surged, with the Shanghai Composite Index accumulating a 21% increase. The stock market is flourishing.
Did A-shares drain liquidity from the cryptocurrency market?
While the A-share market is booming, the cryptocurrency market has been in a continuous slump. Bitcoin, which is highly influenced by the US stock market, has failed to show a synchronized upward trend. Since late September, the price of Bitcoin has quickly dropped from briefly touching $66,500 to around $60,000 in early October. Although there has been a subsequent rebound, it has not yet recovered to the level before China’s stimulus policies were implemented. This has sparked discussions about A-shares “draining” the cryptocurrency market.
Currently, the OTC market price of USDT is 6.9 yuan, while the offshore Chinese yuan exchange rate against the US dollar is 7.07 yuan, indicating a negative premium of 2.4%. This also implies that some funds may have been transferred from the cryptocurrency market to A-shares, seeking short-term high volatility and policy-driven returns.
Positive outlook for the cryptocurrency market in October
Although the recent surge in the A-share market may have attracted some funds from the cryptocurrency market, there is no clear evidence indicating a large-scale shift of funds to A-shares. Most market analysts believe that the current flow of funds is temporary. As the Chinese stock market gradually stabilizes, investors may reevaluate the risks and returns, and some funds are expected to flow back, injecting new vitality into Bitcoin and other cryptocurrencies.
The unique appeal of the cryptocurrency market lies in its high-risk, high-return characteristics, as well as the decentralized and global investment concept. Despite the current lack of clear positive news driving the market, the intrinsic attributes of cryptocurrency assets, especially for funds seeking high speculative returns, still have an irresistible charm. In addition, the inconvenience of depositing and withdrawing funds in the cryptocurrency market has to some extent limited the quick withdrawal of funds, making funds more inclined to flow internally or remain on the sidelines within the cryptocurrency market.
Historical data shows that October has often been a strong month for Bitcoin. In the past decade, driven by improved market sentiment, increased adoption rates, and macroeconomic trends, Bitcoin has had an average increase of 22% in October. This year, with the listing of ETFs and the start of an interest rate cut cycle, it is widely expected that Bitcoin will continue the tradition of a bullish October, opening a new bullish cycle.
The short-term attractiveness of the A-share market has not changed the long-term bullish outlook for the cryptocurrency market. Of course, at the turning point of market trends, it is also necessary to carefully consider reasonable asset allocation to balance risks and returns. As a one-stop comprehensive trading platform, 4E covers assets with different risk levels, including cryptocurrencies, US stocks, indices, forex, and gold, offering over 600 trading pairs, including popular Chinese concept stocks. Users can trade anytime through their mobile phones with just USDT.
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