Bitcoin Shrugs Off China's Credit Impulse Downward Turn

The Chinese credit impulse has turned downward, sparking concerns about market risk appetite. This indicator has preceded major reversals in risky assets by six to nine months in previous cycles. However, Bitcoin seems unfazed by this development.

The credit impulse measures the acceleration of credit rather than its level and is derived from the total social financing published by the People's Bank of China. It adds up everything that fuels the real economy with fresh money: bank loans, corporate bonds, local government issuances, and financing from the shadow banking sector.

The marginal buyer of BTC has changed since 2017. Instead of Chinese investors, American and institutional buyers are now driving demand. These buyers respond to mandates, investment committees, and dollar liquidity rather than the Chinese credit tap.