According to sources at a cryptocurrency exchange in Hong Kong, the overall economic downturn in China has made traditional investments on the mainland risky and uncertain, pushing people to explore crypto-assets as an alternative form of investment.
“In the face of a weak stock market, low IPO demand, and shrinking businesses, Chinese brokerages need a growth story to present to investors, shareholders, and board members… We are witnessing mainland investors entering the digital currency market almost on a daily basis,” said an anonymous senior manager.
As digital assets received approval from authorities in Hong Kong, Chinese residents have taken advantage of annual foreign currency quotas of $50,000 by converting them into crypto-assets and transferring them to cryptocurrency accounts.
The rising interest of Chinese investors in crypto-assets is supported by data from the analytical platform Chainalysis, which reveals an increase in cryptocurrency-related activity in China. The country’s global ranking for peer-to-peer trading volume has jumped to 13th place in 2023 from 144th in the previous year.
From July 2022 to June 2023, the transaction volume in the Chinese cryptocurrency market is estimated to be around $86.4 billion, with large retail transactions ranging from $10,000 to $1 million constituting nearly double the global average.
Earlier, the People’s Bank of China released a “Report on the Financial Stability of the People’s Republic of China for 2023,” highlighting the risks and threats posed by cryptocurrencies to Chinese citizens.