China’s Credit Impulse Turns Red: Bitcoin and Global Risk Appetite in the Crosshairs

When China’s credit impulse turns red, risk assets and Bitcoin’s future are dragged into uncertainty.

The Credit Impulse Signal

Credit impulse, devised by Michael Biggs in 2008, measures the pace of new credit flow relative to GDP. An upward trend signals accelerating consumption and growth, while a decline may foreshadow an economic slowdown.

■Latest reading: 20.84 points – lowest since 2008

■S&P 500’s 12‑month lag: The index rose 12 months after a rise in this indicator

■Commodity prices: Tied to China’s massive consumption; a drop signals weakening demand

Bitcoin’s Wild Rally

In early April 2023, Bitcoin hovered near $30,000 as the credit impulse climbed. Today it surged 25% to over $80,000, driven by:

■Strong inflows into U.S.‑listed spot ETFs

■Unwinding of short positions

■Sentiment dampened by potential Fed rate hikes

Two Plausible Futures

■Continued ascent: Bitcoin may keep climbing, shrugging off China’s weakening credit creation as U.S. institutional flows dominate.

■Risk aversion spill‑over: A downturn in Wall Street, hinted by the credit impulse, could drag Bitcoin down as investors seek safe havens.

Beyond the Numbers

According to MacroMicro data, the credit impulse fell to 20.84, its lowest since 2008, potentially signaling a global slowdown that could weigh on corporate earnings and equity prices.

If markets ignore this signal, it could become the biggest investment mistake of the decade. A drop in credit creation will curb consumer spending and slow growth, pressuring even volatile assets like Bitcoin.