Bitcoin Faces Setback as China Eases Stimulus Plans Impacting ‘Uptober’ Rally Hopes

Bitcoin Faces Setback as China Eases Stimulus Plans Impacting ‘Uptober’ Rally Hopes

Bitcoin has hit a roadblock as China’s decision to delay new economic stimulus measures has tempered market expectations. Investors were anticipating further announcements from China’s National Development and Reform Commission (NDRC) following a briefing held after the week-long Golden Week holiday. However, the lack of urgency or specific new plans dampened enthusiasm.

Market participants had expected a continuation of the government’s September initiatives, which included interest rate cuts and liquidity support to bolster the slowing Chinese economy. A report from 10x Research indicated that these anticipated measures could have sparked a strong rally in global cryptocurrency prices due to increasing liquidity. However, the absence of fresh stimulus has derailed hopes for a major Bitcoin surge as Chinese markets reopened.

The result was a significant 9.41% drop in Hong Kong’s Hang Seng index, marking its largest decline since 2008, and a 2.86% decline in Bitcoin prices. Despite this, many analysts maintain an optimistic outlook for the month, as the U.S. economy continues to drive market sentiment.

U.S. Economic Factors Buoy October Outlook

Despite the recent setback, analysts are still projecting that October will be a positive month for Bitcoin and cryptocurrency markets. The primary driver of this sentiment stems from the U.S. economy, where concerns about inflation and economic slowdown are lessening. Stronger-than-expected jobs data, along with expectations of a mild reduction in the U.S. Consumer Price Index (CPI) on October 10, suggest that inflation may be slowing.

The CPI forecast of 2.3%, down from the previous 2.5%, adds to confidence that the U.S. economy could achieve a soft landing, further bolstered by the recent decline in the Personal Consumption Expenditures (PCE) index to 2.2%. This narrative of economic stability is expected to sustain the positive momentum in cryptocurrency markets through October.

FTX Case Developments Add Bullish Momentum for Bitcoin in Q4

Another factor reinforcing the bullish outlook for Bitcoin is the progress in the FTX bankruptcy case. A U.S. judge approved the reorganization plan for the collapsed crypto exchange on October 9, bringing creditor repayments closer. The plan ensures that 98% of FTX creditors will receive at least 118% of their claims in cash, providing a potential influx of liquidity into the cryptocurrency market.

According to a report by K33 Research, approximately $2.4 billion in creditor repayments could re-enter the crypto market, potentially driving a bullish trend for Bitcoin. These payouts are expected to begin by late Q4 2024 and continue into Q1 2025, depending on the court’s final effective date, which is likely to be mid-November.

This development, combined with other catalysts like declining inflation and robust economic data, is building a strong case for a bullish Q4. The optimism extends beyond Bitcoin, with many anticipating a major altcoin rally that could rival the 2017 bull market.