Market News

China's Covert Bitcoin Strategy: Analyst Warns of Potential Price Plunge

Concerns are mounting within the cryptocurrency community following a recent warning from market analyst Leviathan regarding China's alleged plans to liquidate its substantial Bitcoin holdings.

Leviathan argues that this potential sell-off could push Bitcoin's price down to as low as $40,000, highlighting the precariousness of BTC's current market position.

China is the world's second-largest holder of Bitcoin, with approximately 194,000 BTC seized from illegal activities such as scams and money laundering.

Despite publicly denouncing cryptocurrencies, Chinese authorities are reportedly utilizing an underground fiscal strategy to cash in on these assets, contradicting their anti-crypto stance.

Local governments appear to be working with private tech firms, like Jiafenxiang, to quietly sell off confiscated Bitcoin through offshore exchanges, converting proceeds into yuan.

In 2023, China recorded a significant spike in crypto-related crimes, totaling over $59 billion, leading local governments to increasingly rely on revenue from liquidated Bitcoin for funding.

This situation has prompted calls among legal professionals for a cohesive national policy regarding seized cryptocurrencies, with suggestions of a sovereign crypto fund under central bank control.

Interestingly, Hong Kong's more favorable crypto regulations could serve as a potential refuge for China's Bitcoin assets, raising questions about the future of these holdings.

The upcoming U.S. shifts towards legitimizing cryptocurrencies under President Donald Trump may pressure China to reconsider its approach toward Bitcoin.

How China manages its substantial Bitcoin stockpile could not only reshape its national policies but also reverberate throughout the global financial ecosystem.