Bitcoin poised for capital shift as China halts stimulus

Bitcoin (CRYPTO:BTC) and cryptocurrency markets may see a boost in liquidity despite China's decision to halt economic stimulus measures, according to a recent analysis by trading firm QCP Capital. 

In an October 8 update, QCP shared with its Telegram subscribers that a “capital reallocation” is likely to benefit the crypto markets as China's stimulus winds down.

The analysis noted that Bitcoin’s price action saw a brief decline, dipping below $62,000 after reaching a daily close on October 7. 

This drop came as geopolitical tensions and China’s stimulus halt weighed on risk assets, including U.S. stock futures. 

However, despite short-term downside risks for stocks, QCP anticipates a favorable shift for crypto markets in the near future.

“As the Chinese rally wanes, we anticipate capital reallocation back into crypto, reflecting the industry’s growing maturity as an alternative risk-on asset,” QCP explained. 

This view aligns with the more optimistic outlook shared by other market analysts regarding the final quarter of 2024, with some expecting Bitcoin to perform well in what has been dubbed "Uptober."

QCP further pointed out that upcoming U.S. macroeconomic data, including earnings season and the Consumer Price Index (CPI) release, may challenge stock valuations. 

Meanwhile, geopolitical tensions continue to cloud the outlook for traditional markets. 

Still, the firm maintains a positive medium-term stance, stating that political headlines may continue to drive cryptocurrency movements through the end of the year.

The firm also warned of a possible “reality check” for Bitcoin in the near term, citing a recent uptick in the U.S. dollar index (DXY), which can negatively impact crypto prices. 

As the DXY rose to 102.37, its highest level since July 2023, some traders have expressed caution, suggesting that Bitcoin’s recent gains could be temporary.

At the time of writing, the Bitcoin price was $62,054.47.