Bitcoin and Chinese Stock Market Correlation is ‘Not’ a Potent Indicator, Analyst

The Chinese stock markets have taken a bullish turn. The blue-chip stock index of China made a new decade high above $16,000. Shanghai Composite [SHCOMP] closed up 5.7%, more than 20% high since the lows in March. The bullishness across Asia in China and India also seems to be having a positive effect on the S&P 500, and even Bitcoin is up 1.97% at $9250.

Veteran trader and chart analyst, Peter Brandt, is bullish on the Chinese stock markets.

Chinese stock market has begun its ascent into the sky. Next stop for China A50 is 30,000. #China

The positive sentiments around investments in one of the most important regions of crypto seem bullish on the outside. However, like most things Chinese this also has a diff. government and cultural outlook.

What Does it Mean for Crypto?

According to Su Zhu, founder, CEO and CIO of Three Arrows Capital, it is extremely bullish for Bitcoin. He tweeted,

if you think Chinese A-shares breaking all-time highs is bearish for anything in crypto aside from bears’ ability to pay rent next month, phew

Nevertheless, according to Matthew Graham, CEO, Sino Global Capital and Managing Partner at Liquid Value, it is unlikely to have any direct effect over crypto investments. He notes in an e-mail comment to CoinGape that he wouldn’t place a lot of ’emphasis on China A-shares’ as a potent indicator. He said,

In our view this is a mildly positive indication but nothing more. The Chinese stock market is quite idiosyncratic, it’s at least as likely to react to government pronouncements as to any kind of intrinsic value. It’s a little bit of a stretch to use as an indicator for crypto prices.

The dominance of Local Investors

Moreover, the Chinese markets are majorly dominated by retail investors. According to some reports, more than 99% of the stock investors are individuals. Dovey Wan, the Founding Partner at Primitive crypto, tweeted,

This will further suck in retail capital into the equity market (both are 80% or more retail in China) so makes crypto market even more dull

The projections of the doom of the U.S. is deviating the investors towards Asia, leading with China. Nevertheless, the Chinese markets are dependent on the Government and a general swaying of the majority crowd. Hence, hedge funds and investors will tread carefully before going completely bullish.

How do you think the recent global market movements are going to pan out? Please share your views with us.