Attention Bitcoin Bulls, China Stimulus May Have Lost Its Mojo

The correlation between Bitcoin and the People's Bank of China (PBOC) balance sheet has been a subject of interest in the cryptocurrency community. However, recent changes in the PBOC's monetary policy and the global economic landscape may have altered this relationship, potentially impacting Bitcoin's long-term investment potential.

Bitcoin's price has historically shown a positive correlation with the PBOC's balance sheet, with a 30-day correlation coefficient of 0.66 as of late 2023. This correlation has been attributed to China's significant influence on the global economy and Bitcoin's status as a potential hedge against currency devaluation. However, this correlation has not been consistent, with notable exceptions in 2016 and from late 2022 to 2023.

In contrast, Bitcoin's correlation with the Federal Reserve's balance sheet has been negative, with a 30-day correlation coefficient of -0.88 as of late 2023. This suggests that Bitcoin's performance may be more influenced by Chinese economic policies than those of the United States.

The recent changes in the PBOC's monetary policy, including a massive stimulus package of up to 1 trillion yuan ($142 billion), have raised questions about the future correlation between Bitcoin and the PBOC's balance sheet. The stimulus aims to bolster the Chinese economy, which could indirectly benefit Bitcoin by increasing investments in blockchain and crypto-related ventures. However, the long-term impact of this stimulus on Bitcoin's price remains uncertain.


The potential implications of the recent changes in the PBOC's monetary policy for the future correlation between Bitcoin and the PBOC's balance sheet are complex and multifaceted. While the stimulus package could lead to increased investment in blockchain and crypto-related ventures, it is unclear whether this will translate into a sustained positive correlation between Bitcoin and the PBOC's balance sheet.

In conclusion, the recent changes in the PBOC's monetary policy may have altered the correlation between Bitcoin and the PBOC's balance sheet. While the stimulus package could indirectly benefit Bitcoin, the long-term impact on the correlation remains uncertain. Investors should closely monitor the evolving relationship between Bitcoin and the PBOC's balance sheet, as well as other global economic factors, to make informed investment decisions.