• As inflation rises and threatens the stability of the global economy, Chinese investors are counting on Bitcoin as a safer alternative.
• Despite the current crypto ban in China, Chinese residents are relying on over/the-counter services.
China’s economy has, like many others, been facing its fair share of volatility. With the continuous rise in inflation, Chinese residents are looking for a haven and digital currencies like Bitcoin appear to be their preferred alternative.
As many Chinese residents reported, Bitcoin has offered more stability than fiat, as the asset is not only more promising for investors, but it is also not controlled by Chinese authorities. As recently reported by Reuters, the adoption of digital currencies is growing rapidly in China.
Speaking to this effect was Dylan Run, a Shanghai-based finance sector executive, who reckoned that “Bitcoin is a safe haven, like gold.” Despite the Chinese government placing a ban on crypto trading and mining, Run had utilized bank cards to purchase cryptocurrencies through unofficial market traders.
In a bid to evade government sanctions, he limited his purchase to 50,000 yuan ($6,978). So far, he has secured 1 million yuan in digital currencies, roughly estimated at $141,063, which makes up 45% of one-half of his investment portfolio. The other half of his portfolio consists of 40% in Chinese equities.
Crypto users spotlight the downsides of purchasing digital currencies in China
Speaking on the impact that China’s struggling economy has on the nation, an anonymous senior executive of a Hong Kong-based cryptocurrency exchange highlighted the current situation of things. He remarks that the shaky economic situation has made investment on the mainland extremely risky, uncertain, and disappointing. This is understandably forcing investors to allocate their assets offshore.
“Almost every day, we see mainland investors coming into this market [the Bitcoin market]. If you are a Chinese brokerage, facing a sluggish stock market, weak demand for IPOs, and shrinkage in other businesses, you need a growth story to tell your shareholders and the board.” He asserted.
Notably, the Bank of China, China Asset Management (ChinaAMC) and Harvest Fund Management Co are all dipping their feet into the digital currency industry.
Similarly, Charlie Wong, a Hong Kong-based buy-side equity analyst who purchased Bitcoin on the Hashkey Exchange, explained that Chinese officials are fully aware of Bitcoin’s disruptive nature. They are also aware of Bitcoin’s potential but prefer to contain usage within Hong Kong.
“It is hard to find opportunities in traditional fields. Chinese stocks and other assets perform poorly … the economy is undergoing a crucial transition.” The analyst added.
It bears mentioning that digital currencies are not only banned in China but are also highly regulated within regions abroad.
However, Binance and OKX are accessible to users through over-the-counter channels.
Mainland investors can also create a bank account overseas and buy crypto assets.
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