In May 2023, bitcoin (BTC-USD) started at $28,000, rallied to ~ $30,000, but closed at around $26,900. The monthly underperformance is likely a blip. The widely held crypto survived the collapse of the crypto exchange FTX last year.
Investors building a crypto portfolio should watch BTC closely. A strong stock market should positively influence its price. The risk is that China’s economic slowdown may slow its positive uptrend.
On May 31, 2023, China posted a purchasing managers’ index (PMI) of 48.8. This is down from 49.2 in April. Figures below 50 indicate a contraction. Expect the Chinese government to introduce aggressive monetary policies to stimulate its economy. It cannot allow a slowdown, which hurts consumer sentiment and encourages unrest.
Once China cuts interest rates, weakens its currency, and introduces higher government spending, it would indirectly help BTC. BTC has strong seasonal strength in June and July, excluding the 2018 and 2022 periods.
Stock investors who ignore Bitcoin risk missing out on its long-term prospects. The economy needs a digital currency that runs alongside the current monetary system. Emerging economies need such a system where a stable financial banking system is absent.
