PRESS RELEASE: Cryptos are Unmoved by Chinese Weak Economic Data

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The New Year might not have started on a good note as most of the Asian market is down after tepid Chinese economic data. However, there is no impact on the cryptocurrencies and bitcoin that are trading higher in the 24-hour period. This raises a key question whether cryptocurrencies could be the alternative source of investment since the oil commodity failed to offer any attraction.

Rise In Price

Of the top ten cryptocurrencies, nine are trading in the green in the 24-hour period. While the most valuable digital coin, bitcoin, gained 2.08 percent, Ethereum added 7.4 percent in the same period. EOS, which is ranked fifth in terms of market value gained 3.50 percent while litecoin advanced 4.35 percent. However, bitcoin SV, which was a hard fork from bitcoin cash, fell 2.74 percent whereas bitcoin cash added 0.36 percent and tether 0.29 percent.

The data show, that currently total market cap is steadily growing since January 1, 2019.

The trading pattern in cryptocurrency only suggested that the Chinese weak economic data has no bearing on it. In fact, there is already a feeling that digital coins could be a better bet if the world is dragged into recession in the upcoming period. That is mainly because of the lack of alternative investment avenues as people are willing to take some risk to invest in the fresh asset class.

PMI Drops

On Wednesday, China dropped a bombshell by disclosing a drop in its Caixin manufacturing purchasing managers’ index (PMI) to 49.7 in December. This is the first time the sector fell into a contraction mode, i.e., below 50, after May 2017. The year-end to 2018 witnessed volatility due to the nervousness and the American economy health besides the interest rates path, which is increasing. As a result, S&P 500 futures are also trading down from the initial upward trend in the early session.

It is natural that investors are concerned on the Chinese economy since it is the major force for an international uptick in the recent past. The official PMI data was also worse than the Caixin data since it dropped to its weakest level after February 2016. The government figures indicated that the sector is experiencing one of the worst in about two and a half years. The key factor is that export orders demonstrated a sharp drop to 46.6. This would mean that the index fell only twice before this after the global financial crisis.

Economic Stimulus

Some of the major Asian indexes dropped on Wednesday. This included Shanghai Composite Index by 1.1 percent, Australia’s S&P/ASP by 1.5 percent, Hang Seng Index of Hong Kong by 2.4 percent, India’s Sensex 1.2 percent. The stock exchange in Japan remained closed on Wednesday. Nomura analyst thinks that the worst has not yet come since more headwinds to growth will come from a drop in domestic demand apart from the ongoing credit downcycle. Aside from this, the property sector is going through a cooling period.

China’s Shanghai Composite Index witnessed close to 25 percent of the drop in 2018. The current weakness along with the significant fall in stocks has raised expectations for economic stimulus. CLSA economic research head, Eric Fishwick, reacted to say,

“At present markets are worried about weak Chinese growth and the improved data we expect as stimulus starts to impact the economy will allay these fears.”

Goldman Sachs economists already started seeing rate reduction to the reserve-requirement ratio in the first six-month period of 2019.

Please note: Cryptovibes.com is not a financial advisor. Do your own research before investing in any financial asset. We are not responsible for your investing results.

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