Chinese investors remain determined in their pursuit of bitcoin, despite the government ban since 2021. bitcoin continues to attract substantial investments from Chinese capital, as Reuters technology/bruised-by-stock-market-chinese-rush-into-banned-bitcoin-2024-01-25/” target=”_blank” rel=”nofollow”>reports today.
Mainland China continues buying bitcoin
Dylan Run, a financial executive from Shanghai, epitomizes this trend. Concerned about China's economic prospects and the sluggish domestic stock market, Run ventured into bitcoin in early 2023.
As detailed in the Reuters report, he employed a cunning strategy, using bank cards issued by rural banks and keeping each transaction under 50,000 yuan ($6,978) to evade regulatory scrutiny. In his opinion, “bitcoin is a safe haven, like gold.” Run has now allocated almost half of his investment portfolio to btc, which has risen sharply, outperforming China's weakened stock market.
Surprisingly, Run's journey reflects a broader movement among Chinese investors actively seeking unconventional avenues to access bitcoin. The Reuters report highlights that Chinese bitcoin investors operate within a regulatory gray zone, as cryptocurrency trading is officially banned in mainland China and strict controls govern cross-border capital flows.
Despite these limitations, Chinese investors persist in trading bitcoin on offshore exchanges such as OKX and Binance, or through over-the-counter channels. Additionally, as noted in the Reuters report, Chinese citizens have cleverly leveraged their annual foreign exchange purchase quotas of $50,000 a year, normally reserved for overseas travel or education, to fund btc accounts in Hong Kong.
This phenomenon is driven by a growing appetite for diversification amid China's economic uncertainties. One investor succinctly expressed this sentiment, stating, “Given the economic climate in China, exploring alternative investments like cryptocurrencies has become a necessity.”
bitcoin, along with other digital assets, has become a sanctuary for these investors as they navigate China's complex economic landscape. Importantly, this trend extends beyond retail investors. Chinese financial institutions are also exploring opportunities within the cryptocurrency sector, as highlighted in the Reuters report.
An executive at a Hong Kong-based cryptocurrency exchange underscored the reasoning, saying: “Faced with a sluggish stock market, weak IPO demand and a contraction in other businesses, Chinese brokerages need a compelling growth narrative for their shareholders.” and boards of directors”.
Offshore crypto Exchanges Make Trading Easier
As the report observes, access to bitcoin remains relatively accessible within mainland China. Offshore cryptocurrency exchanges such as OKX and Binance continue to offer their services to Chinese investors, providing guidance on converting yuan into stablecoins through fintech platforms such as Ant Group's Alipay and Tencent's WeChat Pay.
Chainalysis, a cryptocurrency data platform, shed light on the extent of this resilient activity. Contrary to the regulatory ban, the report reveals that cryptocurrency-related activities in China have increased.
China's global ranking in terms of peer-to-peer trading volume skyrocketed from 144th in 2022 to 13th in 2023. Surprisingly, the Chinese crypto market recorded an estimated transaction volume of $86.4 billion between July 2022 and June 2023, far exceeding 64 billion Hong Kong dollars. in cryptocurrency trading. In particular, the share of large retail transactions, ranging from $10,000 to $1 million, was almost double the global average of 3.6%.
According to Chainalysis, the developments “have created speculation that the Chinese government may be moving closer to cryptocurrencies and that Hong Kong may be a testing ground for these efforts.”
At the time of publication, btc was trading at $40,268.
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