China A shares (ASHR) represent domestic Chinese stocks that trade on the mainland. What makes China A unique is that it is the trading index of choice in mainland China.
China A ($ASHR) and Bitcoin (BTC) have one thing in common: They are both highly speculative assets.
Since Chinese investors never met a speculative play or gamble they didn’t like, when $ASHR starts rallying crypto-like, FOMO can kick in. After Donald Trump embarrassed the Chinese by making fun of their declining market, the Chinese government announced in October that it was going to engineer a stock market rally to prevent that from happening again.
Nobody paid attention back then, but people and CNBC are paying attention now as A-shares have been ripping higher despite weakening Chinese data. When the Chinese want to make something happen, they mean business.
Fortunately, we noticed that speculative fever in ASHR can be a leading indicator of sorts for future FOMO in Bitcoin (BTC).
The last massive rally in ASHR early 2015 unfolded about 8 months before the bottom in Bitcoin (BTC). The bottom and subsequent rally in Bitcoin (BTC) started in August of 2015 (Figure 1).
Looking at the major rally in ASHR vs. Bitcoin (BTC) now, we noticed that the ASHR rally started roughly eight weeks before a possible take off in Bitcoin (BTC, Figure 2).
With Bitcoin (BTC) practically mainstream, it seems appropriate that an eight-month lead time in 2015 is equivalent to an eight week lead time in 2019.
Bottom Line: Like the common cold in a kindergarten classroom, speculative fever can be contagious. If people like ASHR, then they almost have to love crypto even more. ASHR is propped up by a government. Bitcoin (BTC) is driven by the idea of a store of wealth based on computer code that can’t be changed without consensus.
To FOMO or not to FOMO? That is the question. The Crypto.IQ Trading Desk always has a good answer.