One of the best measures of demand for cryptocurrencies suggests that some Chinese investors are moving away from digital assets and back into the country’s surging stock market.
Tether’s USDT discount reflects panic among traders exchanging digital assets for fiat, reflecting a trend among Chinese investors to reallocate funds to the booming stock market, especially following a surge in the Shanghai Composite Index. suggests. (Reuters)
Although China banned crypto trading in 2021, many mainland residents continue to use overseas accounts and exchanges to buy and sell digital currencies, with the aim of circumventing capital controls and moving assets abroad. I am doing it.
Tether’s USDT stablecoin, the world’s most used cryptocurrency, has been trading at a discount to the dollar at times since late September, according to Desislava Ober, senior research analyst at blockchain data firm Kaiko. It is said that it has been done. The emergence of this discount coincided with a series of easing measures by the People’s Bank of China aimed at stemming a deterioration in the economic outlook that caused stock prices to soar.
A stablecoin is a cryptocurrency whose value is typically pegged 1:1 to an asset, such as the dollar. These are used to conduct transactions and as a haven from the volatile price fluctuations found in tokens such as Bitcoin.
Livio Wen, CEO of Hong Kong-based cryptocurrency exchange Hashkey, said: “If traders are rushing to convert to fiat currency, we can assume that they are buying Chinese stocks in a panic.” ” he said.
Kaigoosho’s Aubert said that due to the ban, there is no USDT/Chinese Yuan trading pair on crypto exchanges, making the dollar the de facto barometer for measuring activity. The slight discount suggests increased dollar demand and Tether selling.
While it’s difficult to gauge on exchanges how much of USDT’s selling pressure is coming from Chinese investors, other platforms paint a clearer picture. On Binance’s peer-to-peer market, Chinese renminbi merchants are quoting over-the-counter prices for USDT in the range of $6.78 to $6.98 per yuan, while offshore renminbi is priced at $7.07 per dollar in the traditional currency market. It is shown that it is being traded.
“We’re seeing a correlation with demand for trading onshore A-shares,” said Annabelle Huang, managing partner at Singapore digital asset investment firm Amber Group. Some brokerage firms reportedly remained open during China’s recent Golden Week holiday to “cultivate new customers.”
Demand is not only being driven by retail investors, said Laura Vidiela del Blanco, head of business development and strategy at New York-based crypto hedge fund MNNC Group. Some of the company’s institutional investors have shifted their allocations to Chinese stocks.
The Shanghai Composite Index rose 21% from September 23, the day before Chinese markets closed for a public holiday, to September 30.
“These are primarily Asian allocators who are familiar with the market and have multiple strategies beyond digital assets,” Vidiela del Blanco said.
Blockchain information firm Chainalysis estimates that Chinese over-the-counter brokers have attracted an “unprecedented” influx this year, reflecting strong demand from Chinese investors for cryptocurrencies despite an ongoing ban. This shows that there is a demand for it.
“For the first time, some people may wish the national holiday was shorter, but this is a pretty incredible move,” said Amber Fan.
