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DeFi Trends on WeChat, Diginex IPO Nears and Bitmain Rejects Rumors

2020.09.10 Matthew Lam

A weekly overview of blockchain and crypto news from China and Hong Kong

Chinese traders continued to pursue attractive gains in DeFi this week, withdrawing Ether from crypto exchanges for yield farming. Meanwhile, Hong Kong-based digital asset firm Diginex raised $20 million from private placement and is one step closer to the planned Nasdaq listing in late September. These stories and more in this week's edition of OKEx Insights' China Market Watch.

Chinese traders withdraw funds from exchanges for DeFi gains

Chinese demand for DeFi continued to grow this week as the term trended on social media platform WeChat, spiking to an all-time high search volume of nearly 900,000 on Sept. 2.

As the price of Ether dropped from $400 this week, and once plummeted to $316 on Sept. 5, Chinese traders withdrew their ETH from crypto exchanges to participate in DeFi liquidity mining. Data from CryptoQuant shows that the amount of ETH held in exchanges has been dropping since early September.

Ethereum reserves held by crypto exchanges
Amount of ETH reserve held in crypto exchanges. Source: CryptoQuant

On Sept. 6, it was also reported that users were experiencing difficulty withdrawing ETH and other yield-farming tokens from some exchanges as exchange holdings dropped.

Key takeaways 

  • Despite the surging Chinese demand for DeFi, the recent crypto sell-off led to a $1.8 billion wipeout of total value locked in the DeFi market.
  • In the pursuance of liquidity mining, automated market-maker SushiSwap remains in the spotlight for Chinese traders this week.

Diginex raised $20 million ahead of planned Nasdaq IPO

Richard Byworth, CEO of Diginex, a company providing digital asset services, revealed that the company raised $20 million from a group of private investors before the planned listing on the Nasdaq stock market in late September.

According to Byworth, the company completed a private placement of convertible notes from investors, including family offices in London and Hong Kong as well as a hedge fund. He added that the $20 million private placement serves as a reference point for investors to assess Diginex's upcoming takeover by 8i Enterprises Acquisition Corp.

Key takeaways

  • Diginex provides a diverse range of digital asset services, including a digital currency exchange (EQUOS) and a crypto custodian arm (Digivault).
  • The $20 million raised will be used as capital expenditure for Diginex. The company plans to shrink and relocate its staff from Hong Kong to Singapore.
  • The U.S. SEC has already approved the listing of Diginex. The company is expected to list on Sept. 23, once it receives approval from 8i shareholders and Nasdaq.

Bitmain rejected rumors of new mining models presale

Bitmain has released a statement to reject rumors of launching a presale for its latest 5nm mining models.

According to the statement, Bitmain acknowledged that the announcement was planned by its former CEO, Micree Zhan, but clarified that those miners, based on 5nm chips, are still in trial stages and are not expected to be launched in the near future.

Key takeaways

  • Bitmain ousted Micree Zhan as the CEO in October 2019. This implies that Zhan is no longer the legal representative of Bitmain and its subsidiaries, hence he cannot sign any contracts or initiate business relationships on behalf of the company.
  • Bitmain's statement indicates that Zhan's intention to announce the presale of Bitmain's latest mining models was a fundraising attempt to deceive customers.

Asian markets slip due to Tesla-led stock sell-off

The stock market in both China and Hong Kong slipped this week. The Shanghai SE Composite and CSI 300 are currently trading at 3,255 and 4,585, as of press time, with a weekly drop of 4.41% and 5.35%, respectively. The SZSE Blockchain 50 index, meanwhile, stands at 3,888, with a weekly value change of -2.67%. In Hong Kong, the Hang Seng Index dropped 2.36% this week and currently stands at 24,449.

Chinese and Hong Kong market indexes
Performance of Chinese and Hong Kong market indexes. Source: Trading Economics, Investing.com

The widespread sell-off of U.S. tech stocks led to the slip in Chinese and Hong Kong markets this week. The sell-off was led by Tesla, the shares of which have plummeted more than 34% last week and tumbled to $330. Apple and Microsoft also suffered from the sell-off, and their share prices dropped 6.7% and 5.4%, respectively.

Key takeaways

  • The decision to exclude Tesla from the S&P 500 index last Friday was the key driver for Tesla's largest stock price decline. The new additions to the index are Etsy Inc., Teradyne Inc. and Catalent Inc.
  • Softbank's disclosure of $4 billion call options on U.S. tech stocks is a development traders should track, as it could be the reason behind the recent rally prior to the current reversal.

Disclaimer: This material should not be taken as the basis for making investment decisions, nor be construed as a recommendation to engage in investment transactions. Trading digital assets involve significant risk and can result in the loss of your invested capital. You should ensure that you fully understand the risk involved and take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.

OKEx Insights presents market analyses, in-depth features, original research & curated news from crypto professionals.

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