From Beijing to Bitcoin, How China’s Credit Glut Is Moving Global Markets

1. Digital Asset Market: Bitcoin has dropped over 6% to trade near $100,000, amid increased selling pressure stemming from concerns about a potential U.S. government shutdown and signs of slowing economic growth. Analysts highlight that “whale” investors have been moving large amounts of bitcoin from private wallets to exchanges, signaling elevated selling activity, while long-term holders have sold more than one million bitcoin since June. This trend is distinct from previous bull markets, as retail investors and inflows into bitcoin exchange-traded funds have remained relatively muted, reducing the usual demand that helps sustain rallies. Additional concerns stem from ongoing contraction in the manufacturing sector, weak equity markets, and the Federal Reserve's lack of clear guidance on upcoming interest rate changes. The prolonged uncertainty surrounding government funding is stalling the anticipated liquidity injections that could boost risk assets like bitcoin into year-end. Despite this turbulence, some strategists remain optimistic, suggesting that a resolution to the shutdown could catalyze a price rebound.

2. Macro Economics: A growing wave of layoffs across major U.S. corporations has raised concerns about a potential economic slowdown and whether artificial intelligence is driving a white-collar recession. Experts suggest that while some firms are adopting AI to boost efficiency and reduce costs, many may be using it as an excuse, or “AI-washing,” to justify traditional cost-cutting in response to weaker consumer spending and broader economic pressures like inflation and trade tariffs. Companies such as Amazon and UPS are trimming tens of thousands of jobs as they streamline operations and adjust to changing business models, emphasizing efficiency and automation over rapid growth. Analysts say the trend reflects both economic caution and a corporate desire to appear nimble and proactive amid slowing demand and rising costs.

3. Equities: Stocks fell on Tuesday, led by declines in AI-related companies such as Palantir, as investors grew increasingly concerned about the sector's high valuations. Palantir dropped 7% despite strong earnings and guidance, highlighting the pressure on companies with high price-to-earnings ratios to continually deliver exceptional growth. Other AI stocks, including Oracle, AMD, Nvidia, and Amazon, also retreated, dragging the broader S&P 500 and Nasdaq lower. The rally in tech and AI shares has pushed overall market valuations near historic highs, raising worries among analysts and prompting warnings from leaders at Goldman Sachs and Morgan Stanley of possible market corrections ahead. With tech largely driving market gains and breadth remaining narrow, concerns are mounting about what will support the market if momentum in AI or technology falters.

4. The Fed and US Treasury: Job openings dropped to their lowest level in more than 4.5 years in October, as the prolonged government shutdown weighed on hiring, according to Indeed data. The company’s Job Postings Index fell to 101.9, reflecting a steady decline since mid-August and signaling a cooling labor market. Salary offers have also moderated, with year-over-year wage growth slowing to 2.5% in August from 3.4% in January. With official government data delayed by the shutdown, economists and policymakers are turning to private sources for insight into employment trends. The broader softening in labor demand has raised concerns among Federal Reserve officials, increasing the likelihood of further rate cuts to support the job market.

5. Geopolitical: China warned the US to avoid crossing four key “red lines” if it wants to preserve the recent trade truce signed between Donald Trump and Xi Jinping in South Korea. Ambassador Xie Feng identified Taiwan, democracy and human rights, China’s political system, and development rights as sensitive issues that Washington should respect. He emphasized the need for both countries to implement the agreed consensus and stabilize global markets. The irony is that China is including democracy and human rights as its red lines. Despite these calls for restraint, ongoing tensions over tariffs, technology, and rare earth supplies highlight the fragility of the agreement. The truce is not expected to last long.

   New York City’s mayoral race dominates attention as Democrat Zohran Mamdani faces off against independent Andrew Cuomo. Polls show Mamdani with a strong lead across major surveys, including a Fox News poll that places him sixteen points ahead of Cuomo, with Republican Curtis Sliwa far behind. New Yorkers, it seems, are left choosing between a self-described socialist dreamer who quotes Marx and a scandal-plagued former governor.

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Crypto’s Pullback Looks More Technical Than Fundamental

Bitcoin’s dip below $100,000 appears more sentiment-driven than structural, echoing weakness in equities rather than signaling a fundamental deterioration. Despite modest ETF outflows, financial conditions remain supportive, and long-term holders continue to accumulate. On-chain data indicates low sell-side pressure, while the Stablecoin Supply Ratio suggests substantial dry powder on the sidelines. For investors with a longer horizon, this setup suggests an attractive entry point, though near-term volatility may stay elevated as markets digest shifting risk sentiment.

China’s Monetary Overflow Is Lifting Global Prices

China’s liquidity surge is quietly shaping global inflation dynamics. As domestic growth stalls amid property stress and weak consumption, the banking system continues to produce excess liquidity that increasingly seeps abroad through trade channels, offshore financing, and commodities. These flows are fueling asset appreciation globally, from equities to emerging market debt. With Western central banks tightening or holding steady, China’s credit expansion is acting as a hidden stimulus for global assets, amplifying price pressures even outside its borders.

A World Awash in Capital, Searching for Yield

The broader theme linking both markets is capital abundance. Despite cyclical anxiety, global liquidity remains immense and mobile, chasing scarce returns across asset classes. Structural savings gluts, high cash balances, and uneven policy normalization have created a world where money is plentiful but conviction is not. Until that dynamic shifts, volatility will likely stay high, but so too will the opportunities for investors who can differentiate between noise and trend.

Happy Trading!

The 1Konto Team

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