The crypto-currency wants to have a piece of the 50 billion dollars that came in last time on the Chinese stock market. According to Fund flow data from the EPFR about 800 global Hedge funds have been allocated since March 2020, a quarter of its managed assets in the amount of 2 trillion US dollars in Chinese shares.
As Bitcoin is the US stock crashed in the course of the month dramatically increased the commitment of the global Fund in China’s high-risk assets in the year-on-year by 20 percent.
China, with its comparatively low losses in a time of global financial turmoil, led by the Coronavirus pandemic, a safe haven.
The Shanghai Composite lost, for example, only 5.2 per cent YTD, while its U.S. counterpart, the S&P 500, lost 11.1 percent. Meanwhile, Bitcoin has surpassed the pessimistic expectations, after he had recovered more than 150 percent from its lows in March.
No V-shaped recovery
The good and bad recreations created different points of view for global investors.
First, the Fund managers expect a better V-shaped recovery of the Chinese shares, which explains their increased involvement in the market. Secondly, you want to balance your risks off from the Coronavirus affected the US economy.
And thirdly, you were considering to invest in Bitcoin – at least not until the middle of the second quarter.
But there is nothing that could be referred to as a V-shaped recovery in a market that is still affected by a resurgence of the Coronavirus cases. The beginning of this week released Chinese economic data seem like a nightmare.
They show that factory prices in the country have fallen to four year lows. The worst of the factories, whose profits fell in the first quarter, to 36.7 per cent were affected.
Liu Xuezhi, an Analyst at the Bank of Communications, commented: The Chinese investors would have to anticipate a V-shaped recovery of the Coronavirus-factor would slow down the recovery however.
Thus, the first two investment are ticked off priorities. Low consumption, slow production, and unemployment – all lead to an economic contraction.
The Best thing that can happen is a Stimulus: if the Central banks cash to obtain liquidity to keep the markets above water. However, this is an artificial recovery, as the underlying profits remain poor.
Thus, the third Option: Bitcoin is left to the investors.
Bitcoin: a hedge?
Chinese investors not shift their focus from Bitcoin, even if you escape the prying eyes of the government on off-exchange Trading platforms.
Researchers from Chainalysis Inc. found last year that the demand for the Stablecoin Tether against the Background of a trade war between the United States and China has increased dramatically.
As Washington and Beijing have imposed on each other, “tit-for-tat”tariffs and the People’s Bank of China let the exchange rate of the Chinese Yuan under $ 7 per unit, bought investors Tether as an entry in the Bitcoin market.
As it says in the report:
“Tether was used in this year, in 99% of the Bitcoin spot transactions in China, making the Yuan has been almost completely superseded”
The next downward movement in the Chinese stock could have both local and Offshore investors to seek safe places of refuge. In the light of the historical context, you could increase the demand for Bitcoin over the Tether.
The Wall Street points the way, with veterans such as Paul Tudor Jones small Engagements in crypto-discuss Futures.