It has been reported that USDT, a stablecoin issued by Tether, is being affected by the sudden return of Chinese investors to the domestic stock market.
USDT has been trading below the value of the US dollar at times since late September, according to a new report from Bloomberg.
Stablecoins are typically pegged to the dollar or other asset in a 1:1 ratio.
According to Dessislava Aubert, senior research analyst at blockchain data firm Kaiko, the stablecoin discount comes at the same time China’s central bank is enacting a number of easing measures to mitigate the worsening economic outlook that has sent stocks surging.
Livio Weng, CEO of Hong Kong-based cryptocurrency exchange Hashkey, said:
“If traders are rushing to exchange back to fiat, it can be inferred that they are buying Chinese stocks.”
Aubert suggests that a slight USDT discount means there is higher demand for dollars than for stablecoins.
Despite China’s ban on cryptocurrency 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 determine whether Chinese investors are responsible for the majority of USDT selling using exchange data.
However, P2P trading on Binance shows that Chinese yuan sellers are offering to convert top stablecoins in the range of 6.78 to 6.98 per yuan. Meanwhile, the yuan trades at $7.07 per dollar when exchanged in traditional currency markets.
The Shanghai Composite Index soared 21% from September 23 to September 30.
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