For the first time since the very beginning of August, the Bitcoin price has broken through $66,000. Ironically, the most likely source of the surge is China, which banned Bitcoin transactions in 2021. Looking back, we had barely entered the first week of August before Bitcoin tumbled, and fell all the way down to $49,100. This time, the high price level appears more stable, and as I wrote a few weeks ago, we are now entering a month where Bitcoin has performed exceptionally well over the past four years.
NBX remains the leading crypto service provider in the Nordics.
At the beginning of this week, China announced a rare stimulus package, which includes lower interest rates and lower reserve requirements for banks, in addition to increased fiscal support for the economy. The background for all this is that Chinese authorities set a high target at the beginning of the year by aiming for an annual growth of 5%. The growth rate seemed to hold for a long time, but as the summer progressed, more and more analysts believed that growth would be lower than the set target rate. Just a few weeks ago, Hui Shan, Goldman Sachs’ chief economist for the Chinese market, downgraded growth estimates for China from 4.9% to 4.7%.
As a result of the extensive stimulus package, the largest stock indices in China have risen sharply this week - a weekly growth not seen in decades. The blue-chip index CSI 300 rose 15.7% for the week, and we have to go back to 2008 - when China announced a similar stimulus package - to find a comparable weekly growth. The Hang Seng index ended the week up about 13% - the largest weekly increase since 1998.
The sharp rise in China has not only spread in and around the Asia-Pacific region, but also to the US stock market and the global crypto market. The surge has led to cumulative inflows into spot Bitcoin ETFs being positive all week, amounting to a net positive of $612.1 million so far, according to Farside.
Furthermore, Bitcoin is up 55.1% so far this year, while Ethereum is up 16.4% for the year. Many analysts now believe that the two leading cryptocurrencies will continue to rise this year, partly because both presidential candidates now (apparently) support blockchain technology.
This text is intended to inform and is not an investment recommendation.
Best regards,
Adam Jakobsen.
NBX.
