BCA Research: China's Stimulus Insufficient for Bitcoin's Bull Market

In Brief:

BCA Research suggests China's recent stimulus measures have not generated a significant credit impulse, hindering the potential for a Bitcoin bull market.

The lack of a substantial credit boost contrasts with past cycles, such as in 2015, when a strong credit impulse coincided with Bitcoin's bullish trends.

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BCA Research: China's Economic Stimulus Measures Are Not Enough to Support Bitcoin's Bull Market

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BCA Research has expressed skepticism regarding the impact of China's latest economic stimulus measures on Bitcoin's potential bull market. According to a report from ChainCatcher, the current rise in risk appetite may be short-lived, as the stimulus has failed to create a significant bullish "credit impulse" similar to those seen in past decades, such as in 2015.

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Between 2000 and 2020, China's booming real estate market enabled substantial credit expansion, driving economic growth. However, the absence of similarly large productive credit destinations today makes it challenging to replicate such a credit impulse. Credit impulse, which measures new credit flow relative to GDP, has been a key indicator of global economic growth and risk appetite since the 2008 financial crisis.

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Historical Context and Bitcoin's Bull Market

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Historically, a rise in China's credit impulse has coincided with the bottoming out of Bitcoin bear markets. During the last major easing cycle in 2015, China's credit shock reached 15.5 trillion yuan, or 15% of GDP. This period saw Chinese stocks, represented by the CSI 300, more than double in six months, while Bitcoin's price surged from around $100 to nearly $20,000 by December 2017.

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BCA Research's analysis suggests that without a comparable credit boost, the current stimulus measures may not be sufficient to support a sustained Bitcoin bull market.

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