Crypto prices rise due to China interest rate hike halt
China-based blockchain companies have surged, with some up 500% in the past week, following a decision by the nation’s central bank to halt interest rate hikes and the perception that attitudes toward crypto are softening in both Hong Kong and Beijing.
The cryptocurrency’s market cap rose to $1.19bn (£985bn) on Monday, up 1.1% in the past 24 hours, according to data from Coingecko.
Bitcoin (BTC-USD) rose 15% in the past week to over $25,000.
The second largest cryptocurrency by market cap, ethereum (ETH-USD), gained 12.5% in the past week to $1,694.
Most of the gains have reverberated from China, where the country’s central bank decided on Monday to leave interest rates unchanged. The resulting increase in liquidity spilled over into the crypto ecosystem.
Read more: Crypto live prices
Although China has blocked citizens from buying bitcoin and crypto, citizens are encouraged to spend money, and the increased economic activity is positively affecting a number of China-based blockchain projects.
Cryptocoins with strong links to China, such as NEO (NEO-USD), VeChain (VET-USD) and Phoenix Chain (PHB-USD) have all pumped in the past week.
There is a perceived softening towards crypto in Beijing and Hong Kong, with a China-based crypto firm, Conflux (CFX-USD), seeing gains of over 500% in the past week. The enterprise blockchain token has skyrocketed by 1300% since the beginning of 2023.
Conflux announced last week that it is partnering with China Telecom to build blockchain-based SIM cards for mobile phones.
The Chinese Conflux Network is a government-approved blockchain, used in conjunction with the country’s Blockchain Service Network (BSN), China’s blockchain technology platform for enterprise use.
Read more: Crypto: How to get funding for your technology start-up
Craig Erlam, senior market analyst at OANDA, told Coindesk: “The bullish case for the Chinese economy remains solid, and the likely release of stimulus over the next couple of months as it ramps up could exaggerate that.
“Domestic demand is going to be the cornerstone of the economic recovery, and policymakers seem poised to unleash it to its full potential.”
China’s central bank leaves interest rates unchanged
China’s freeze on interest rate hikes has stimulated a flow of investment into crypto.
On Monday, the People’s Bank of China left its one- and five-year interest rates unchanged. This had an impact on the CSI 300 (000300.SS), which tracks shares of the largest listed companies in Shanghai and Shenzhen.
Shares in China rose to close 2.45% higher in late trading on Monday.
The cryptocurrency market has marched in lockstep with stock prices, especially technology stocks. As tech stocks in Shenzhen rose, so did China-based blockchain and crypto assets.
The Shenzhen Component ( 399106.SZ ) rose 2.03% to close at 11,954.13 on Monday.
Hong Kong lifts crypto ban
The loosening of monetary controls by China’s central bank saw a boost in Hong Kong stocks, with the Hang Seng Index ( ^HSI ) rising 0.85% in its final hour of trading on Monday, and the Hang Seng Tech Index ( HSTECH.HK ) rising 1 .32%.
This coincided with Monday’s announcement by Hong Kong’s Securities and Futures Commission (SFC) that it plans to allow retail crypto trading within the financial hub.
The SFC said it would launch a consultation process for Virtual Asset Service Providers (VASPs) seeking a license to provide trading services for retail clients in Hong Kong.
Read more: NoiseGPT: AI app that turns text into celebrity voices raises concerns of ‘deep fake mayhem’
The move will lead to a process of registering tokens before they are listed on exchanges, so that only pre-approved tokens will be available to retail customers.
Representatives from China’s liaison office have been frequent guests at Hong Kong’s crypto gatherings in recent months, hinting that Beijing is subtly supporting the idea of Hong Kong becoming a crypto hub, according to a Bloomberg report this week.
Crypto founder Justin Sun’s Hong Kong move
Justin Sun, founder of Tron Network, also announced this week that he will move Huobi cryptocurrency exchange’s Asia headquarters from Singapore to Hong Kong, capitalizing on the city’s efforts to establish itself as a crypto hub.
Sun told Nikkei Asia that the crypto-friendly guidelines recently announced by the Hong Kong government, including allowing retail participation in crypto markets, was the driving force.
See: The Reasons UK Banks Are Blocking Crypto Exchanges | Crypto Mile
Download the Yahoo Finance app, available for apple and Android.
