‘Panic Buying’ of Chinese Stocks Impacts Cryptocurrency Market

Chinese Investors Shift Focus from Cryptocurrencies to Stock Market

Impact of China’s Ban on Crypto Trading

A recent trend indicates that Chinese investors are moving away from digital assets towards the rapidly growing stock market in the nation. Despite the ban on crypto trading in China in 2021, many residents have been utilizing overseas accounts and exchanges to trade in cryptocurrencies, seeking to bypass capital controls and transfer assets offshore.

USDT Discount Reflects Shifting Investment Patterns

Role of Stablecoins in Cryptocurrency Market

The USDT stablecoin, a widely used cryptocurrency, has shown fluctuations relative to the dollar since late September, as observed by Dessislava Aubert, a senior research analyst at Kaiko. This development coincided with the Chinese central bank’s efforts to stabilize the economy, leading to a surge in stock prices. Stablecoins like USDT serve as a reliable means of conducting transactions and offer a haven from the volatility often found in tokens like Bitcoin.

Market Indicators and Trading Patterns

Chinese Yuan and USDT Trading Trends

The absence of USDT/Chinese yuan trading pairs has made the dollar a key gauge of activity in crypto exchanges. Analysis suggests a growing demand for dollars and a decrease in Tether sales. Binance’s peer-to-peer marketplace highlights Chinese yuan merchants quoting over-the-counter prices in the range of 6.78-6.98 per yuan for USDT, contrasting with the offshore yuan’s rate of 7.07 per dollar in conventional currency trading.

Increasing Demand for Chinese Stocks

Institutional Investors’ Shift to Chinese Equities

Not only retail investors but also institutional players are showing interest in Chinese stocks, according to Laura Vidiella del Blanco, an executive at a crypto hedge fund. The Shanghai Composite Index witnessed a significant 21% surge just before China’s holiday closure, prompting some Asian allocators with diverse investment strategies to focus on Chinese equities.

Rising Interest in Over-the-Counter Brokers

China’s Growing Appetite for Cryptocurrency Investments

Despite the crypto ban in China, Chainalysis Inc. estimates reveal a remarkable inflow of funds to the country’s over-the-counter brokers this year. This surge signifies the strong interest of Chinese investors in cryptocurrencies notwithstanding the regulatory restrictions.