After a rough year in 2022, the macroeconomy has gradually started recovering this year. With most governments renewing their hawkish stances, inflation has begun to cool down in major economies. In fact, signs of growth have already started flashing.
Let’s take the case of China itself. On Tuesday, the National Bureau of Statistics released factory activity-related numbers. The official manufacturing PMI rose to 52.6 in February. The reading is the highest in nearly 11 years, as shown below. Back in April 2012, this index’s reading hit 53.5.
For context, the 50-point benchmark acts as a division between growth and contraction. Conventionally, if PMI is above 50, it represents expansion. Values below 50 indicate shrinking growth. Economists were expecting a reading of only 50.5, but the latest number managed to take everyone by surprise.
The big takeaway managed to rub off positively on Chinese stocks. The CSI 300 index was up by 1.4% on the day, while the SSE was up by 1%. Hong Kong’s Hang Seng Index, on the other hand, was up by more than 4% on Tuesday, Mar. 1.
Thanks to the equity breakout, several in the space expect Bitcoin to “follow” suit. Prominent business analyst John Squire exclusively told Watcher Guru that BTC no longer paid attention to the S&P 500. Instead, he said, it pays more attention to the Chinese market. In fact, other prominent analysts in the space also expect something similar to pan out.
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Making a case for the ‘ifs’ and ‘buts’
The correlation statistics, however, weave a different story. Here, it is worth noting that a recent analysis by Kaiko revealed that Bitcoin remains “uncorrelated” with Chinese equities. As illustrated below, the CSI-Bitcoin correlation is slightly above zero. On the other hand, HSI-Bitcoin’s correlation continues to hover in negative territory, despite a slight recovery noted.
Bitcoin’s correlation with U.S. equities, on the other hand, has slightly improved of late. Like shown below both the correlation curves of the Nasdaq and S&P 500 [black, gray] have been heading toward their December 2022 levels in the positive territory, affirming the same.
The world’s largest economy continues to call the shots for Bitcoin, and not even the second-largest economy has the power to change that dynamic at the moment. Thus, for Bitcoin to continue rising, it’ll likely need a push from U.S. equities. At press time, Bitcoin was trading at $23.7k, up by around 1.9% on the daily.
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