2023-09-23 16:06:36
The value of China’s capital outflow (nearly 50 billion in US dollars) reached heights not seen in 8 years in the month of August. As a result of the event, investors are expected to look for investment opportunities outside China’s borders. The case has become a subject of debate among researchers, who are investigating whether the current situation and the search for new investment options could lead to a Bitcoin boom. Could Chinese capital outflows and a weakening yuan lead to Bitcoin? According to the latest official data, Chinese capital outflows reached $49 billion in August. This was the highest monthly reading since December 2015, potentially putting further pressure on the yuan. “The familiarity of Bitcoin among Chinese investors amid a weakening domestic economy could result in significant inflows into Bitcoin in the coming months,” said Markus Thielen, head of research and strategy at Matrixport. “The USD/CNY exchange rate is at a 17-year high as the US economy expands strongly, while the growth momentum of the Chinese economy appears to be weakening,” Thielen said. “The post-Covid-19 consumption recovery fell short, and the authorities did not implement adequate measures to support the economy. In the absence of growth, Chinese companies suffer from weak margins (the amount received from the sales price of products)”. Thielen believes continued pressure on the yuan and a lack of growth in local companies could cause investors to look outside of China for opportunities. “Crypto may be the only viable option” “Given the country’s strict capital controls, crypto may prove to be one of the few available channels,” argued Thielen. “Crypto may be the only viable option,” he added. In a post published on X on September 20, BitMEX co-founder Arthur Hayes also addressed the situation in the Chinese economy. He shared his ideas about what he thought might be behind the situation. He first brought up the possibility that Chinese capital will flow into gold. In the next point, he touched on the repayment of the offshore debt of the United States in dollars. Finally, he suspected that some local big guns were secretly preparing to leave the country. He added that he hoped some of the capital would find its way to Bitcoin. Some possibilities: 1. China is buying a lot of gold2. China is paying down USD offshore debt of its banks and corporations3. Some wealthy comrades are fleeing the coop Most importantly what China is not doing is: BUYING MORE US TREASURIES!!!!! pic.twitter.com/viVNIdZxth — Arthur Hayes (@CryptoHayes) September 20, 2023 In fact, at the end of 2016, a similar incident already took place. At the time, it was reported that Chinese investors were increasingly turning to Bitcoin to move capital out of the country. The trading volume of capital outflows at the time and the value of the Chinese Yuan likely contributed to Bitcoin’s price increase, with BTC reaching a peak by the end of 2017 that changed the lives of quite a few of its investors forever. However, according to Singular Research crypto analyst Edward Engel, times have changed and Chinese capital outflows may not have the same impact on Bitcoin today as they did back then. “China has pretty much mastered how to stop the outflow, so I would be surprised if people were using older methods.” “The last time I heard about this was in 2017-2018, when junkies used bitcoin to support underground banks. We all know that the CCP [Kínai Kommunista Párt] he has since filled those holes”. (The “junks” refer to organizations that helped wealthy Chinese gamblers move large sums of money overseas. China has since cracked down on these companies.) Current BTC Price The price of bitcoin has remained between $25,000 and $27,000 since mid-August. move. It fell to a two-month low below $25,000 on Monday last week, but positive news from a new spot ETF filing earlier this week quickly buoyed the price. The cryptocurrency found itself as a result of the news and crossed the $27,000 exchange rate for the first time in 2 months. BTC was then able to hold the price starting at 27 for another four days, and then fell back. It is currently trading at $26,570.
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