Bitcoin unaffected by stock market crash in Hong Kong

Today, Hong Kong’s stock market had its worst day in almost 15 years. The Hang Seng China Enterprises Index (HSCEI) lost 7% yesterday and has lost another 4% so far today. It is an index of mainland China companies listed in Hong Kong.

HSCEI lost 16% in last 5 days

Overall, the HSCEI has lost 16% in the last 5 days. Hang Seng is down 11% overall, CoinDesk reported. According to Bloomberg, the Hang Seng Volatility Index is now over 40. It is used to measure volatility in the Hong Kong stock market.

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The last time the index went over 40 was in March 2020, when global markets were hurt by the outbreak of Covid-19.

The price of Bitcoin (BTC/USD) was relatively unaffected by the market volatility, remaining almost flat over the last week. At the time of writing, CoinMarketCap data showed Bitcoin was trading at $38,612, down 1.61% in the last 24 hours.

Some investors are advising caution although Hong Kong’s market decline is not macro-driven, but regulatory. Bizantine Capital CIO Andrew Bakst expressed the opinion that the fragile global economy will eventually come back stronger in an interview with CoinDesk:

All-time high intra-country wealth gaps, along with all-time high sovereign debt levels, and all-time highs of inter-country connectivity have created an extremely fragile global economy. All three factors are inflationary and hurt sovereign equities.

Although there is no correlation between crypto and Hong Kong’s market volatility, Bakst believes Ethereum (ETH/USD) might bind the world as it rebuilds should the global market be brought down for whatever reason.

Regulatory developments hurt the market

According to Huobi Research Institute Director Flora Li, regulators drove market volatility for the most part. The crash is not related to broader macroeconomic factors, which is why it has not impacted the crypto market. She wrote in an email:

Last Friday the SEC disclosed a list of delisting risks that included five U.S.-listed Chinese companies, sparking investor concerns about the delisting of Chinese stocks, so Chinese and U.S. investors have been selling off.

She added that investors in Hong Kong have also been selling due to the links with the Chinese market.