China’s technology‑focused STAR50 index, which tracks the 50 largest chip and AI‑related firms on the Shanghai board, has shed nearly 40% of its value since its July peak, wiping out an estimated $480 billion in market capitalisation, according to Reuters data cited by CryptoSlate. The decline coincides with a broader $2.4 trillion erosion in mainland Chinese equities reported by Decrypt, reflecting investor skepticism that the country’s AI boom will ever generate sustainable profits. By contrast, Bitcoin posted a 26.6% gain over the same July 9‑Oct 26 calendar window, a rise highlighted by both CryptoSlate and Decrypt as a rare positive outlier amid the tech rout.

BTC / USD
Source: CoinGecko. Prices are indicative.

Scale of the Chinese Tech Collapse

CryptoSlate notes that STAR50 closed at 2,185.83 on July 9 and fell to 1,315.5 on Oct 26, marking a 39.8% loss across 71 trading sessions. Decrypt adds that the index’s 40% drop has driven its price‑to‑earnings multiple from a peak near 250 down to roughly 100, indicating a steep re‑pricing of future earnings expectations. Protos further quantifies the fallout, reporting a 42% decline in the STAR50 AI sub‑index and a combined $340 billion loss across 14 publicly listed Chinese AI firms. The broader CSI 300, which represents China’s 300 largest listed companies, has entered a bear market after slipping more than 20% from its peak, according to Decrypt.

Bitcoin’s Counter‑Trend Performance

During the same period, Bitcoin’s price rose 26.6%, a gain that stands out against the backdrop of falling equities. CryptoSlate’s analysis shows that while the CSI 300 fell 15.9% and the Nasdaq 100 slipped 1.5%, Bitcoin’s daily‑log‑return correlation with the Nasdaq 100 rose to about 0.63 over the most recent 30 matched U.S. market days, suggesting stronger day‑to‑day co‑movement even as the crypto asset posted a net gain. Decrypt reported that Bitcoin briefly dipped below $80,000 ahead of the Federal Reserve’s Oct 28 rate decision, but quickly recovered, underscoring its resilience amid global risk‑off sentiment driven by high crude prices and 10‑year Treasury yields near 5%.

Potential Contagion Risks and Market Signals

Both CryptoSlate and Decrypt warn that prolonged equity losses could translate into funding pressure for crypto markets. The International Monetary Fund has highlighted how margin calls and forced liquidations can spread across asset classes, a scenario that could affect leveraged Bitcoin funds if investors seek cash. However, recent data show mixed funding conditions: Farside recorded net US spot Bitcoin ETF outflows of $636 million on Oct 22 but net inflows of $110 million on Oct 26, while US high‑yield credit spreads narrowed slightly and the overnight SOFR rate edged above the Fed’s reserve‑balance rate. These indicators suggest that, for now, financing remains orderly, but sustained tech‑sector weakness combined with widening credit spreads could heighten contagion risk.

What to Watch Next

Analysts will be monitoring several variables for signs of further spillover. First, any acceleration in ETF outflows or a sharp rise in credit spreads could signal tightening liquidity for Bitcoin. Second, policy actions targeting Chinese AI hardware—such as the U.S. bans on Chinese robots and optical parts—may deepen the sector’s stress and test cross‑market correlations. Finally, upcoming macro data, including the Fed’s post‑decision stance and global commodity price trends, will shape risk appetite and could either cushion or exacerbate the divergence between Chinese equities and crypto assets.

Sources

This article was prepared by the CoinMag newsroom from the reports listed above.