Chinese investors have pushed margin borrowing to a new high, a development that could amplify risk-taking across global markets and ripple into crypto trading. On Monday, margin trades outstanding in China’s onshore equity market hit 2.28 trillion yuan (about $320 billion), narrowly eclipsing the 2015 peak, according to Bloomberg.
The surge comes as local equities rally: the Shanghai Composite is up roughly 15% year-to-date, outpacing the S&P 500’s ~10% rise, while the broader CSI 300 has gained about 14%. On the surface, the numbers signal renewed risk appetite among Chinese investors, but important differences with 2015 temper the optimism.
Data tracker MacroMicro highlights that today’s margin boom occurs amid slower economic growth and lingering deflationary pressure. Forward earnings for listed companies are down around 2.5%, which raises the stakes for debt-funded positions: if firms struggle to raise prices, leverage can magnify losses rather than gains.
For crypto markets, the connection is indirect but meaningful. There is no industry-wide metric for margin debt in crypto, so traders commonly watch perpetual funding rates as a proxy for leverage demand. Right now, funding rates across the top 25 tokens sit in the mid-single to low-double digits — roughly 5%–10% — suggesting a moderate level of bullish leverage rather than the froth of a speculative blow-off.
That mix — heavy equity leverage in China alongside measured crypto funding rates — implies a market environment where risk-taking is elevated but cautious. The danger: a rapid unwind of China’s record margin positions could trigger broader volatility, prompting cross-asset liquidations that push down prices in risk assets, including Bitcoin. Traders using leverage in either market face heightened exposure to margin calls and forced sells.
What to watch next: Chinese margin balances, key macro datapoints on growth and inflation, and crypto funding-rate trends. Together these indicators will help signal whether the current risk-on mood can persist or if a correction could send shockwaves through both equities and cryptocurrencies.
Source: CoinDesk. Read the original coverage for full details.