China's Credit Pulse Indicator Drops to 2008 Low, Bitcoin Faces Potential Risks

ChainCatcher report, according to CoinDesk, the "Credit Pulse" indicator, which measures the rate of change in China's new credit relative to GDP, is flashing red. The Bloomberg China Credit Pulse Index recently stood at 20.84 points, the lowest level since 2008. This indicator, introduced by economist Michael Biggs in 2008, is considered correlated with the global manufacturing cycle and typically leads S&P 500 returns by approximately 12 months. Société Générale strategist Albert Edwards warned that ignoring China’s recent monetary tightening could become “the biggest investment mistake of the decade.” Despite the weakening indicator, Bitcoin surged 25% in August and briefly surpassed $80,000, driven primarily by inflows into U.S. spot ETFs, short covering, and catch-up gains after lagging behind equities. Two scenarios lie ahead: one is that Bitcoin continues to rise, as current crypto trading is largely driven by U.S. institutional capital and has become less sensitive to signals from China’s credit conditions; the other is that if U.S. equities decline as Edwards predicts, risk-off sentiment could spill over into Bitcoin. Which scenario materializes remains to be seen.