China’s Blockchain Stocks Are Avoiding Worst of Bitcoin Carnage

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China’s blockchain-linked stocks are a rare quantity: a corner of the cryptocurrency market that’s relatively unscathed amid the rout in digital tokens.

A Bloomberg-curated basket of eight Chinese A-share equities with ties to the blockchain technology behind cryptocurrencies -- such as Shenzhen Forms Syntron Information Co., Ygsoft Inc. and Brilliance Technology Co. -- is down less than 2% as of 2 p.m. in Singapore on Thursday. That compares with a more than 5% average plunge for a basket of 24 global crypto stocks outside China.

The contrast owes a lot to China’s prior crackdowns on crypto trading, such as a ban on transactions between fiat and cryptocurrencies. As a result, while there are listed Chinese specialists in the digital-ledger technology backing virtual currencies, there isn’t a cohort of coin miners and trading platforms.

That means mainland crypto-linked equities are likely less affected by the gyrations of digital tokens, said Vijay Ayyar, head of Asia Pacific with crypto exchange Luno in Singapore.

China’s Blockchain Stocks Are Avoiding Worst of Bitcoin Carnage

This looser relationship is among the reasons Chinese blockchain stocks largely missed out on the stellar runs achieved by global crypto shares amid a more than yearlong boom in digital tokens.

The People’s Bank of China carried a fresh warning this week that virtual currencies can’t be used as money. It’s also developing a digital version of the yuan under its control.

Bitcoin rocked the cryptocurrency industry Wednesday, whiplashing markets with a 31% plunge in the morning followed by a 33% surge in the afternoon. There were many potential triggers, from Elon Musk falling out of love with the largest token, to the prospect of harsher regulatory oversight and excess leverage.

Bitcoin was steadier Thursday, trading around $40,000 as of 1:45 p.m. in Hong Kong. That’s about $25,000 shy of its mid-April record.

Among well-known crypto-exposed stocks, U.S. exchange Coinbase Global Inc. slumped 5.9% Wednesday to hit a record low, while MicroStrategy Inc., which holds substantial Bitcoin, sank almost 7%. But firms like MicroStrategy have done well for longer term investors -- the stock has more than tripled over the past year.

©2021 Bloomberg L.P.

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