Tether's USDT hit by 'panic buying' of Chinese stocks: report

USDT, the stablecoin issued by Tether, is reportedly suffering from the impact of the sudden return of Chinese investors to their country's stock market.

According to a new report from Bloomberg, USDT has traded below the value of the US dollar at times since late September.

Stablecoins are typically 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 discount coincided with the Chinese central bank implementing several easing measures to mitigate the deteriorating economic outlook, which led to a rise in stock prices.

Livio Weng, CEO of Hong Kong-based crypto exchange Hashkey, says:

“If traders rush to convert back into fiat currency, it can be concluded that they are buying Chinese stocks in a panic.”

Aubert suspects that the slight USDT discount indicates higher demand for dollars than stablecoins.

Despite a ban on crypto trading by China, mainland residents continue to use accounts and exchanges abroad 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 trading shows that Chinese yuan sellers offer exchanges for the top stablecoin in the range of 6.78 to 6.98 per yuan. The yuan is now trading at 7.07 per dollar on the traditional foreign exchange market.

The Shanghai Composite Index rose 21% between September 23rd and 30th.

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