Chinese stock market may push Bitcoin further till January
Another stumble in the Chinese stock market has coincided with a slight rise in the price of Bitcoin suggesting a correlation which is likely to continue until January.
While the stock dropped to a six-month low, Bitcoin reaches multi-year high to hit $788 on Tuesday December 13 according to CoinMarketCap – almost a 2.5% rise from its $769 tag on Monday though the price has now been corrected to $780 at the time of this publication.
An article in the Wall Street Journal states that the downward trend in shares will likely continue until January based on a pickup in IPOs in recent months which is making investors expect an imminent wave of selling by shareholders whose stockholdings have been locked up since the companies in which they had invested were listed. This is because China requires existing shareholders of a listed company to hold their stocks for at least a year after the firm floats.
Calculations by Sinolink Securities shows there is more than 370 billion yuan of such locked-up shares that will become tradable this month with a further 440 billion yuan of such shares coming up in January.
With China’s crackdown on stock purchases by insurance firms and the current Chinese stock market outlook, there could be further switch to Bitcoin as a store of value or medium of exchange.
According to MarketWatch, shares in the Shanghai Composite Index ended down 2.5% to be the biggest one-day drop in percentage terms since June 13 with nearly 1,000 stocks in the red on Monday December 12 following the crackdown. On the other hand, the Shenzhen Composite Index was 4.9% lower.
China’s insurance regulator banned an insurer from further investing in stocks on Friday for conducting short-term trading despite recent stock investment by a few major insurers have helped boost trading activity in the Chinese markets. The insurers were among the big decliners in the A-shares market on Monday.
Reports also suggest that comments by U.S. President-elect Donald Trump on Sunday that there may be a change in the U.S.’s acceptance of the “one China” principle, a cornerstone policy that has helped maintain peace between China and Taiwan, also contributed to what hurt investors.
Olusegun Ogundeji writes on tech-related issues including from the crypto/Blockchain space.
Another stumble in the Chinese stock market has coincided with a slight rise in the price of Bitcoin suggesting a correlation which is likely to continue until January.http://news.8btc.com/chinese-stock-market-may-push-bitcoin-further-till-january
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