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/1 We are witnessing a resurgence in Chinese demand for cryptocurrencies. This trend in the making comes after more than a year of relative quiet, a reminder of the time when Chinese volumes were king. 
/2 What is behind this sudden risk appetite? The Hang Seng index has driven up 20% since the end of 2018 (HSCEI below), while margin trading volumes have nearly doubled from December of last year.
/3 Important to understand - Chinese equity markets are much more retail-centric, with the archetypal Mom and Pop investors accentuating price reflexivity. We may now have turned a corner on the enormously damaging price effects of forced deleveraging in Chinese assets.
/4 For a variety of reasons not least of which are the volatility and offshore functionality, cryptocurrencies had taken hold of the Chinese investing public's imagination. In late 2016, more than 90% of bitcoin volumes were paired against the Yuan.
/5 That number, following the CCP's crackdown on cryptocurrency trading in 2016 and 2017, cratered to below 1%. Investors have turned to OTC markets to fill the gap, where cryptocurrencies once again command a premium (~5% today).
/6 We have seen similar undercurrents in Japanese and Korean markets. The ingredients of a macro trend are in the making, but a word of caution - retail, momentum-oriented traders are an incredibly fickle camp to align with.
/8 A final observation - It is no coincidence that after months of doldrums, Asian opens are driving action.
/9 More data - BitCNY, a stable asset on the Bitshares $BTS network used as an onboard ramp by Chinese investors, has seen 24hour volume nearly 10x from lows 2 months ago:
/10 Another back drop - Chinese millennials are funneling into trading speculative assets as money market funds become relatively unattractive, P2P lending regulations tighten, and cost of living trends apply pressure for higher yields.
bloomberg.com/opinion/articl…
bloomberg.com/opinion/articl…
/11 Add to all this the pressure to diversify away from the yuan:
