China’s Credit Impulse Index and Its Potential Impact on Bitcoin and Global Markets

According to reports, according to the data source MacroMicro, China’s credit impulse index (which measures the change in new credit or bank loans to GDP) has rebounded from 24% to 26% this year, indicating that credit expansion has restarted relative to growth rates. A paper published by the Federal Reserve in November stated that the sustained rise in China’s credit impulse may promote the global financial cycle, support global risk sentiment, and expand global asset prices and global credit. Bitcoin, as a risky asset, often aligns more or less with stock trends. In addition, the previous expansion of credit in China is consistent with the significant trend change of Bitcoin from a bear market to a bull market. Therefore, the continuous increase in the credit impulse index may be a good omen compared to the special currency.

Data: China’s credit expansion will promote the global financial cycle and support global risk sentiment

China’s credit impulse index has been making headlines as it continues to rebound from 24% to 26%. This measure, which looks at the change in new credit or bank loans to GDP, suggests that there has been a restart in credit expansion relative to growth rates. The increase in China’s credit impulse has also been linked to potential impacts on global financial cycles, asset prices, and credit. Experts are now analyzing whether this could have an impact on Bitcoin and other risky assets. In this article, we will examine the credit impulse index, its recent growth, and its potential impact on global markets and Bitcoin.

Understanding the Credit Impulse Index

Before we dive into the impact of China’s credit impulse index, it’s essential to understand what it is. The credit impulse index is a measure of how fast credit is changing. Specifically, it tracks the change in new credit available to the private sector as a percentage of GDP.
When the credit impulse index is high and continues to rise, it means that credit growth is accelerating relative to GDP growth. In contrast, when the index is low or declining, credit growth is slowing relative to GDP growth. By monitoring credit impulses, analysts can gain insight into the direction of the economy and its potential for growth.

China’s Credit Impulse Rebound

After dropping to 24% in 2020, the credit impulse index in China has rebounded to 26% this year. According to the data source MacroMicro, this indicates that credit expansion has restarted relative to growth rates.
This news is significant because the credit impulse index has been linked to global risk sentiment, asset prices, and credit. In a paper published by the Federal Reserve in November 2020, it was noted that the sustained rise in China’s credit impulse may promote the global financial cycle. It went on to say that this could lead to support in global risk sentiment, expand global asset prices, and global credit.

Impact on Bitcoin

Bitcoin, as a risky asset, often aligns more or less with stock trends. In the past, the expansion of credit in China has correlated with significant trend changes in Bitcoin from bearish to bullish. Given the recent growth in China’s credit impulse index, some experts are predicting that Bitcoin will experience further bullish trends.
While it is still early to conclude anything, the recent increase in the credit impulse index may be a good omen for Bitcoin compared to the special currency. If history is any guide, there is a possibility that Bitcoin could see an upward trend if the credit impulse index continues its growth.

Potential Impact on Global Markets

The growth of China’s credit impulse index could have an impact on global markets beyond Bitcoin. As previously stated, the Federal Reserve has noted that the rise in China’s credit impulse could impact global asset prices, credit, and risk sentiment.
This is supported by the fact that the global financial crisis of 2008 was preceded by a similar credit impulse growth phase in China. While this does not necessarily mean that another financial crisis is imminent, it does raise concerns about the global market’s vulnerability.

Conclusion

The rebound of China’s credit impulse index is an exciting development, with potential implications for Bitcoin and global markets. Given the correlation between the credit impulse index and Bitcoin trends, it’s worth monitoring the index’s growth in the coming months. Additionally, while the Federal Reserve’s paper suggests positive outcomes, we must remain wary of potential risks that may arise.

FAQs

Q: What is the credit impulse index?
A: The credit impulse index is a measure that tracks the change in new credit available to the private sector as a percentage of GDP.
Q: How has China’s credit impulse index been performing?
A: After dropping to 24% in 2020, it has rebounded to 26% this year, indicating that credit expansion has restarted relative to growth rates.
Q: What impact could the growth of the credit impulse index have on Bitcoin and global markets?
A: Historically, the expansion of credit in China has correlated with significant trend changes in Bitcoin from bearish to bullish. The growth in credit impulse could also impact global asset prices, credit, and risk sentiment.