China Panics As Bitcoin Nears Record High
Bitcoin has reached a new record high in over 30 currencies this week, including India and Japan (and the euro this morning), but the cryptocurrency’s nearing record highs in China have sparked renewed warnings from Chinese state media about the risks of investing in cryptocurrencies, as interest around digital assets remains strong in the country despite a sweeping ban on crypto mining and trading.
Bitcoin has passed all-time highs in 30+ countries, including China and India. pic.twitter.com/63CnC9DE0F
— Balaji (@balajis) February 28, 2024
As SMCP reports, a rebound in bitcoin prices cannot “hide” the underlying risks of the digital asset, state-owned newspaper Economic Daily said on Sunday.
Wild fluctuations in bitcoin value remain the norm, and cryptocurrencies have yet to enter the mainstream, the article said, adding that regulatory scrutiny of the market remains tight.
Investors should maintain a “clear and rational” mindset, it said.
Bitcoin in Renminbi is very close to record highs…
Chinese state media has persistently tried to dissuade people from engaging in cryptocurrency-related activities, as authorities have cited the risks of capital flight and financial instability.
In September 2021, 10 government bodies escalated the country’s crypto ban by jointly declaring a broad range of cryptocurrency-related activities as illegal financial activities.
In 2022, as cryptocurrency prices plunged following a series of company meltdowns, the Economic Daily warned that the prices of bitcoin, which the newspaper called “nothing more than a string of digital codes,” could head to its “original value” of zero.
In the same year, executives at Blockchain-based Service Network, a state-backed Chinese initiative pushing for the commercial adoption of blockchain technology, called cryptocurrencies “the biggest Ponzi scheme in human history.”
All that sounds very familiar to the narratives of Liz Warren, Jamie Dimon, and Gary Gensler (who, of course, have no dog in this fight at all).
In case you’re confused: yes, crypto trading and mining have been banned in China since 2021.
But, battered by a slumping stock market, Reuters reports that more and more Chinese investors are using creative ways to own bitcoin and other crypto assets that they believe are safer than investing in crumbling stock and property markets at home.
China’s economic downturn “has made investment on the mainland risky, uncertain and disappointing, so people are looking to allocate assets offshore,” said a senior executive of a Hong Kong-based cryptocurrency exchange, who declined to be identified due to the sensitivity of the topic.
Bitcoin and crypto assets have attracted such investors, he said:
“Almost every day, we see mainland investors coming into this market.”
The underground crypto market in China is thriving as many believe that Chinese officials are cognisant of how disruptive bitcoin can be and yet aware of its huge potential, hence their endorsement of crypto trading in Hong Kong, to keep a toehold in the crypto business booming in financial centres such as Singapore and New York.
Dylan Run, a Shanghai-based finance sector executive, started moving a bit of his money into cryptocurrencies in early 2023, when he realised that the Chinese economy and its stock markets were going downhill.
“Bitcoin is a safe haven, like gold,” says Run.
