Following claims that China will return to crypto, signals in this direction have also begun to strengthen. The latest statements made by a senior member of the Chinese Communist Party were interpreted as "China's approach is changing."
China may be looking for ways to back down from the cryptocurrency ban it imposed in 2021. Following claims that China would lift this ban by the end of the year, positive signals have begun to come in this direction in recent days.
Recently, Zhu Guangyao, China’s former vice finance minister, said that Chinese authorities should reconsider their stance on crypto. While describing cryptocurrencies as “a vital element for the development of the digital economy,” Guangyao drew attention to developments in the United States. Guangyao stated that the United States has begun to embrace the sector and that China needs to keep up with this situation in order not to be left behind.
“China’s approach is changing”
According to US-based cryptocurrency exchange Coinbase, China’s approach to crypto is also changing. Coinbase research analysts David Duong and David Han stated in their latest report that Guangyao is a senior party member and therefore his comments are important. “Given that Zhu Guangyao is a senior party member, we believe these comments are meaningful and could send positive signals for this asset class,” the analysts commented.
“Leverage has decreased, funding rates have halved”
The same report also noted that the declines experienced this week reduced the leverage in the system. Underlining that with the decline, over $700 million worth of leveraged positions were liquidated and that this figure was recorded as the highest weekly position liquidation since the volatility in early August, analysts continued by saying:
“Thus, the leverage in the system has decreased. Annualized funding rates on BTC and ETH have decreased from 10% to 11% to 5% to 7%. We think the market is currently more balanced in terms of direction as investors digest a multitude of potential macro catalysts.”
