USDT, the stablecoin issued by Tether, has reportedly been affected by the sudden return of Chinese investors to their home country’s stock market.
Since the end of September, USDT has at times traded below the value of the US dollar, according to a new report from Bloomberg.
Stablecoins are typically pegged to the dollar or other assets in a 1:1 ratio.
The stablecoin discount comes as the People’s Bank of China implements several easing measures to mitigate the deteriorating economic outlook that has sent stock prices soaring, according to Desislava Ober, senior research analyst at blockchain data firm Kaiko. It was around the same time as that.
Livio Wen, CEO of Hong Kong-based cryptocurrency exchange Hashkey, said:
“If traders are rushing to convert into fiat currency, we can assume they are buying Chinese stocks in a panic.”
Aubert suggests that USDT’s slight discount indicates that there is a higher demand for dollars than stablecoins.
Despite China’s ban on crypto trading, people living on the mainland continue to use overseas accounts and exchanges to buy and sell digital currencies. The report said it is difficult to use currency data to determine whether Chinese investors alone were responsible for the bulk of the USDT selling.
However, peer-to-peer trading on Binance shows Chinese yuan sellers offering to exchange the top stablecoin at prices ranging from 6.78 to 6.98 per yuan. Meanwhile, the renminbi trades at 7.07 yuan to the dollar on traditional currency markets.
The Shanghai Composite Index soared 21% from September 23rd to September 30th.
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