Chinese stock market takes another hit. Will bitcoin be affected?

The Chinese stock market has taken a couple of hits recently. In fact, they just faced their worst start to a year to date, as the markets have plunged over 7% in their opening session.

Things started out with a halt of the CSI-300 Futures, also known as the Chinese Securities Index, totalling 15 minutes, and failing by 5 percent. However, the move, which initially seemed overly-dramatic, failed to stop the plunge. Once the market reopened, the shares continued losing in value, thus tumbling to 7%.

In order to counter-attack this, China’s new circuit breaker measures were imposed. For those that do not know, following China’s stock market plunge last year, a new mechanism was introduced by the securities regulator, needed to automatically prevent losses whenever the stock market suffered from volatility issues.

There’s been a lot of speculation concerning the reasons for the plunge, and some of the most believable include the diminishing industrial activity in China, alongside with the falling of the yuan, China’s national currency. Together with this, another factor which may have influenced the plunge is the dumping of stocks- an action taken by investors who anticipated the ban issued on share sales this summer.

To help improve China’s shuttering economy, the People’s Bank of China has imposed a few more measures, by cutting its benchmark deposit and lending rates, while also lowering the mandatory cash reserves required by banks to be able to operate. The country’s diminishing economy has high chances of contributing to further bitcoin implementation. Considering the fact that over 80% of the world’s bitcoin transactions are carried out in the region, a possible increase in the price and bitcoin trading activity in China will commence in the foreseeable future.

As digital currencies have been the direct witness to a great year in 2015, surviving all the hits, an increase in adoption is likely if China’s stock market continues on this path towards failure.

Do you think that the plunge in Chinese stock trading will play an influence on bitcoin? Let us know your thoughts in the comment section below.

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