- Interest in the Chinese stock market has increased strongly among investors
- They are choosing it over cryptocurrencies and even the USDT is trading at a discounted price
- This followed China’ stock rise and the promise of interest rate cuts by the government
The Chinese government’s recent economic stimulus that followed right after the FED’s interest rate cuts led to China stocks rising, and very heightened investor interest.
The released liquidity has not yet flowed into the cryptocurrency market, and even key stablecoins like USDT are selling off to enter the China stock market.
Details About Investor Interest in the Growing Chinese Market
In response to the government’s economic stimulus, which affected both the PBOC and commercial banks, the Shanghai Composite Index jumped 21% from Sept. 23 to Sept. 30.
Chinese investors started to enter the market rapidly, showing an unprecedented interest in Chinese stocks, more than in the crypto sector at the moment.
Head of BD & Strategy MNNC Group noted:
“These are mostly allocators in Asia who are familiar with the market and have multiple strategies besides digital assets”
That said, this rapid prioritization of Chinese equities could affect some crypto assets, as Livio Weng, chief executive officer of Hong Kong-based crypto exchange Hashkey, noted:
“If the traders are rushing to exchange back into fiat currency, it can be inferred that they are panic buying Chinese stocks.”
Dessislava Aubert, senior research analyst at blockchain data firm Kaiko notes:
“Binance’s peer-to-peer marketplace shows that Chinese yuan merchants are giving over-the-counter price quotes in the range of 6.78-6.98 per yuan for USDT, while the offshore yuan trades at 7.07 per dollar in the traditional currency market.”
Investor interest in cryptocurrencies has not completely waned, and it remains high even though cryptocurrencies are banned in China.
Blockchain intelligence firm Chainalysis Inc. estimates show that China’s over-the-counter brokers are attracting “unprecedented” inflows this year.
Conclusion
We have seen China’s economic stimulus create a strong effect that has not lasted long. Against a falling economy and production rates, such an influx into the Chinese stock market should noticeably play in their favor.
Having said that, it can be said that Chinese investors react very fervently to the growth of the Chinese market if it affects cryptocurrency in this way.
And yet, we can also see it as a widening of the spectrum of assets in which investors have seen value and are trying to diversify risks.
Let’s see how long-term this will have an effect and how soon Chinese investors will return to crypto in full force.
