Even as Chinese financial watchdogs maintain their ground that cryptocurrency trading is illegal, they can’t prevent crypto enthusiasts form finding a way to interact with their friends outside the country. This phenomenon has been brought to light by a research done by Diar and which indicated that USDT trading in China is on the rise.
According to Diar’s report:
“The demand is on the rise. In the 2018 bear market, Chinese exchanges accounted for 39% of all known on-chain transaction value for Tether (USDT). This year to date, the red dragon is responsible for a whopping 60%.”
$10 billion traded
Diar added that the 60 percent accounted for roughly 10 billion US dollars worth of USDT trading. Surprisingly, China surpassed the United States , which recorded USDT trading of approximately 450 million US dollars.
Additionally, virtual currency exchanges with a global footprint account for a more significant percentage of the USDT trading activities compared to those stationed in the United States.
For example, Binance and Bitfinex accounted for 31 percent of USDT trading, while US-based crypto exchanges accounted for less than 10 percent in 2018. However, both the global and US-based exchanges recorded declines since the stablecoin trading previously stood at 47 percent for Binance and Bitfinex and 44 percent for exchanges in the United States.
Transactional and trading volumes are in agreement
The report continued:
“On-chain transaction al volume in 2019 has gone up in unison with reported trading volumes….massive amounts of funds are being moved into exchanges in China for no other purpose than trading. Even a single trade of Tethers moved into Chinese exchanges would equal daily volumes equivalent to $215Mn in the month of April, which is three times as much as Coinbase and on par with Binance.”
Chinese crypto traders are seen to have started the massive exodus to USDT in April this year. At the time, USDT, which is typically pegged to one dollar, increased to $1.00703, indicating that buyers can’t get enough of the stablecoin.
First buy USDT on OTC then trade on exchanges
The crypto Twitter community was also aware of the increase in Chinese traders paying attention to USDT. For instance, on April 7, cnLedger tweeted:
“Chinese markets reveal strong buys. OTC (Over-The-Counter) trades, the almost only way to buy Bitcoin with fiat in China , showing considerable $ premium (1 USDT = 7 CNY) over the official rate of 1 USD = 6.7CNY… after the Peoples’ Bank of China (PBoC ) ICO/exchange ban, the most convenient way to buy cryptos in China, is to buy stable coins like USDT first using OTC, and then trade it into any cryptos you want in exchanges.”
Still, in April this year, reports emerged that Bixin Capital , DGroup, among other top crypto lenders have been offering personal loans denominated in virtual currencies to help wade through the bearish moments in 2018.
According to Bixin Capital’s head of financial markets, Xi Wang, personal crypto loans were the best choice since they are not overly affected by crypto market conditions. Therefore, it’s easier to make profits in a bearish market while issuing crypto denominated loans.
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