China's weak economy, including an unstable property market and weak consumer demand, is posing risks to global markets and economies like the US, according to experts.
Cryptocurrencies like Bitcoin have not reduced financial risks in emerging economies, but instead, have amplified them, according to a study conducted by central banks and published by The Bank for International Settlements (BIS).
China's stuttering economy poses a major threat to global commodities demand, as economic activity and credit flows deteriorate, and structural challenges and weaknesses in various sectors, including base metals, iron & steel, crude oil, coal & gas, and pork, affect the market.
The cryptocurrency market has experienced a notable downturn, with the total market capitalization falling by 10% and triggering significant liquidations on futures contracts, attributed to factors such as rising interest rates, inflation, delays in approving a Bitcoin exchange-traded fund (ETF), financial difficulties within the Digital Currency Group (DCG), regulatory tightening, and a strengthening US dollar.
China's economic challenges, including deflationary pressures and a slowdown in various sectors such as real estate, are likely to have a global impact and may continue to depress inflation in both China and other markets, with discounting expected to increase in the coming quarters.
A Hong Kong crypto exchange, HashKey, will begin retail trading on August 28, allowing residents to invest up to 30% of their net worth into cryptocurrencies with a warning if the limit is exceeded; meanwhile, China is cracking down on private blockchain firms, arresting crypto executives and seizing assets, and the FBI has traced down $41 million in Bitcoin stolen by North Korean hackers from various projects.
China's unexpected economic slowdown, driven by excessive investment in the property sector and local government spending, is leading experts to question whether a collapse is imminent, although they believe a sudden collapse is unlikely due to China's controlled financial system; however, the slowdown will have implications for global growth and emerging markets, particularly if the U.S. enters a recession next year.
China's stock market is on the verge of a meltdown as major property developers collapse, while Wall Street is booming due to renewed interest in tech stocks, posing a potential threat to the UK as it gets caught in the crossfire.
China's economic slowdown is causing alarm across the world, as it is expected to have a negative impact on global economic growth, leading to reduced imports and trade, falling commodity prices, a deflationary effect on global goods prices, and a decline in tourism and luxury spending.
Global investors are skeptical of China's ability to stabilize its financial markets, with many predicting that economic pressures will cause the offshore exchange rate of the yuan to reach record lows.
Crypto-related stocks soar as the chances of fund companies offering Bitcoin ETFs increase, though Coinbase Global faces obstacles.
Concerns arise that the struggling Chinese economy and volatility in the stock market may negatively impact Bitcoin's price and hinder its role as an alternative store of value in the face of a strengthening U.S. dollar.
US companies are becoming increasingly hesitant to invest in China due to concerns over new anti-spying laws, competition from state-funded firms, and the country's economic challenges such as deflation and a property crisis.
Crypto prices, including bitcoin and major tokens, experienced a decline due to profit-taking and a general risk-off environment, erasing gains from Grayscale's court victory, with prices weakening ahead of the U.S. jobs report release.
Bitcoin and crypto could experience significant growth in the next few months, with September expected to be a particularly eventful period, including the potential impact of U.S. bitcoin ETF filings and China declaring crypto as "legal property and protected by law."
Despite efforts by the U.S. and other countries to reduce reliance on Chinese supply chains, Chinese companies have successfully expanded their presence in key markets such as cutting-edge materials and electric vehicles, making it difficult for countries to ensure their economic security.
Disappointing economic data in Asia-Pacific markets, overinvestment in China, and Chinese electric vehicle companies expanding in Europe are among the key factors impacting global markets, while the price of bitcoin remains volatile with conflicting predictions about its future.
Market makers in the crypto sector are facing increased costs and lower profitability as investors shy away from the industry following a $2 trillion market crash, leading them to diversify their activities, store digital assets away from trading venues, and use them as collateral to borrow tokens for deployment on crypto platforms.
The prospect of a prolonged economic slump in China poses a serious threat to global growth, potentially changing fundamental aspects of the global economy, affecting debt markets and supply chains, and impacting emerging markets and the United States.
The lack of a fully regulated financial market in the US contradicts global economic interdependence, and as a result, the crypto industry is moving offshore rapidly; however, the US government is likely to eventually establish a clear regulatory framework and invest in blockchain R&D, thus strengthening the industry.
China's economic growth has slowed but has not collapsed, and while there are concerns about financial risks and a potential property crisis, there are also bright spots such as the growth of the new energy and technology sectors that could boost the economy.
Big tech stocks and cryptocurrencies, including Bitcoin, may underperform in the coming years due to contracting market liquidity and the Federal Reserve's hawkish policies, according to crypto analyst Nicholas Merten.
The top crypto exchanges in the world are dominating the market, with the eight largest platforms accounting for over 91% of market depth and 89% of trading volume, according to crypto insights firm Kaiko. Binance remains the leading exchange, with a market share of 64.3% in 2023, but liquidity is concentrated within a few exchanges, leading to concerns about decentralization. Altcoin liquidity has also suffered due to regulatory issues in the US, with Coinbase, Kraken, and Bitstamp holding the majority of altcoin liquidity.
The crypto market is expected to experience increased volatility due to economic events such as the downward revision of economic growth forecasts for the eurozone and the looming FTX liquidation, as well as the release of crucial inflation data in the US.
Bitcoin, ethereum, and other top cryptocurrencies have been struggling recently despite the market conditions, as the bitcoin price drops and Coinbase plans to integrate bitcoin's lightning network, potentially causing crypto price chaos.
Bitcoin's vulnerability to contracting global liquidity is highlighted by Bloomberg Intelligence's crypto market analyst Jamie Coutts, who suggests that the cryptocurrency will only turn bullish when global liquidity levels expand, warning that it is unlikely to rise until liquidity reverses and anticipating that institutional investors will only show significant demand for digital assets once liquidity rises.
Cryptocurrency prices are less influenced by macroeconomic factors compared to traditional financial assets, with key drivers being market confidence, adoption, technology, and liquidity conditions, while traditional assets are more affected by macroeconomic drivers such as interest rates and inflation, as well as government regulations and transparency requirements.
The crypto industry experienced significant capital outflows of $55 billion in August, leading to a liquidity crunch that allows isolated events to have a greater impact on prices and market movements, according to an analysis from Bitfinex.
China's macroeconomic challenges, including deflationary pressures, yuan depreciation, and a struggling property sector, could have broader implications beyond its borders, impacting global metal exporters, trade deals, and global inflation; however, investing in China's stocks may offer compelling valuations despite the current downturn.
Crypto strategist predicts a significant expansion in the digital assets market similar to 2019, with the possibility of a short squeeze after a Bitcoin market correction.
Hong Kong remains the top jurisdiction for crypto adoption in 2023, while the US falls to third place, and Switzerland takes second place, according to a study.
Despite claims of a bear market for cryptocurrencies, indicators such as website traffic suggest that crypto adoption and demand for crypto services have actually been growing in 2023.
A recent report from Chainalysis suggests that grassroots cryptocurrency adoption is seeing a stronger recovery in lower middle-income nations compared to the rest of the world, indicating a potentially promising future for crypto in these countries.
The outlook of U.S. companies on China's markets in the next five years has hit a record low due to factors such as political tensions, tariffs, slow Covid recovery, and issues in the real estate market; however, complete decoupling between the two economies is unlikely.
