USDT, the stablecoin issued by Tether, will apparently suffer the consequences of the sudden return of Chinese investors to their country’s stock market.
According to a new report from Bloomberg, USDT has at times traded below the value of the US dollar since late September.
Stablecoins are generally pegged to the dollar or other assets at a 1:1 ratio.
According to Dessislava Aubert, senior research analyst at blockchain data company Kaiko, the stablecoin handover coincided with the Chinese central bank’s implementation of several easing measures in a bid to mitigate the deteriorating economic outlook that sent shares soaring.
According to Livio Weng, chief executive of Hong Kong-based crypto exchange Hashkey,
“If traders rush to trade back to fiat currency, it can be inferred that they are panic buying Chinese stocks.”
Aubert suggests that USDT’s slight discount indicates higher demand for dollars than that of the stablecoin.
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. According to the report, it is difficult to use exchange data to determine whether Chinese investors alone are responsible for the majority of USDT sales.
However, Binance peer-to-peer exchanges show Chinese yuan sellers offering to convert the highest stablecoin in a range of 6.78 to 6.98 per yuan. Meanwhile, the yuan is trading at 7.07 per dollar in the traditional currency market.
The Shanghai Composite Index rose 21% between September 23 and 30.
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