Analysis: Bitcoin and Asian stock market funds may be flowing to Chinese stocks
Although the cost of converting the stablecoin USDT into shares is around 3-5%, the 50-70% upside potential offered by Chinese stocks makes this strategy attractive.
According to observers, bitcoin has remained largely flat since the end of September, while surging 20 per cent on the back of stimulus policies in China, where a rally could be drawing money out of cryptocurrencies and Asian stock markets.
However, the rotation of funds may only be temporary. China's beleaguered stock market has since recovered as a result of a series of stimulus measures. However, the surge could limit the upside for risky assets such as bitcoin. Experts see it as a shrewd risk-reward strategy, and despite the switching costs, the potential rise in the Chinese market has attracted investors.
Danny Chong, co-founder of the Digital Asset Association Singapore, said that even with a 3-5% conversion cost, there is still a potential increase of 50-70%, which is a strategic choice for smart investors. Money from other Asian stock markets may also flow into Chinese stocks. Since September 24, the Shanghai Composite Index has risen by more than 20% to its highest point since May 2023, while the Hang Seng China Enterprise Index has risen by more than 25%.