Are Speculators Getting Out of Cryptocurrencies Because of China's Stock Market?
Bloomberg quotes Muyao Shen as saying that some Chinese investors are dumping cryptocurrencies for the country's soaring stock market, which has been boosted lately by government stimulus. The official prohibition on crypto trading came into effect in 2021, but according to Bloomberg, many mainland citizens have still using offshore accounts to trade digital currency. Their ability to relocate assets overseas and avoid capital regulations is a direct result of this tactic.
The most widely traded cryptocurrency in the world, USDT, has been selling at a discount to the US dollar as of late, according to a Bloomberg article. around the same time as China's central bank implemented a number of economic reforms, this discount began to appear around the tail end of September. Investors found the stock market appealing because of these initiatives, which aimed to enhance the country's economic future and drove stock prices upward.
As an alternative to Bitcoin and other more speculative cryptocurrencies, stablecoins like USDT are usually tied to the dollar and provide more consistent value. According to Bloomberg, a reduction in USDT's price indicates that there is more selling pressure on the cryptocurrency. According to Livio Weng, CEO of the Hong Kong-based cryptocurrency exchange Hashkey, who spoke with Bloomberg, this pattern suggests that investors are selling Tether in order to buy Chinese equities, which might be caused by market panic.
Bloomberg states that the dollar has replaced other metrics as the primary indicator of economic activity as a result of China's prohibition on direct USDT/yuan trade. Consequently, the decline in USDT price indicates a stronger demand for dollars. More proof of this move has been revealed by Bloomberg, which shows that Chinese yuan merchants on Binance's peer-to-peer marketplace are pricing USDT cheaper than the official yuan-to-dollar exchange rate.
