USDT, the stablecoin issued by Tether, is reportedly feeling the fallout from Chinese investors suddenly returning to their country’s stock market.
According to a new one report According to Bloomberg, USDT has sometimes traded below the value of the US dollar since late September.
Stablecoins are usually pegged to the dollar or other assets at a 1:1 ratio.
According to Dessislava Aubert, a senior research analyst at blockchain data firm Kaiko, the stablecoin cut coincided with the Chinese central bank implementing several easing measures in an effort to ease the deteriorating economic outlook, sending stock prices higher.
Says Livio Weng, CEO of Hong Kong-based crypto exchange Hashkey:
“As traders rush to convert back into fiat, it can be inferred that they are panic buying Chinese stocks.”
Aubert suggests that the slight USDT discount is indicative of greater demand for dollars than for the stablecoin.
Despite a ban on crypto trading by China, those living on the mainland continue to use foreign accounts and exchanges to buy and sell digital currencies. According to the report, it is difficult to use stock market data to determine whether Chinese investors alone are responsible for the majority of USDT sales.
However, Binance’s peer-to-peer trading shows that Chinese yuan sellers are offering to convert the top stablecoin in a range of 6.78-6.98 per yuan. Meanwhile, the yuan trades at 7.07 per dollar when exchanged in the traditional foreign exchange market.
The Shanghai Composite Index rose 21% between September 23 and 30.
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Generated image: Midjourney