According to some analysts, Bitcoin could see a large influx of money from the world’s second largest economy in the coming mohs amid the weakening of the Chinese yuan and the biggest capital flight from the coury in the last 8 years.
According to Coielegraph, Markus Thielen, head of research and strategy at Matrixsport, believes that the familiarity of Chinese investors with Bitcoin during the weakening of the coury’s economy can lead to the ery of significa capital io the market of this digital currency in the coming mohs.
The data of Bloomberg’s latest official report shows that the volume of capital flight from China reached 49 billion dollars in August, which is the largest mohly outflow of capital from this coury since December 2015. This capital outflow will probably put more pressure on the yuan.
Thielen said:
The rapid expansion of the US economy and the slowdown of China’s economic growth has caused the dollar/yuan exchange rate to reach its highest level in the last 17 years.
He added:
The consumption trend after Covid-19 could not return to its previous level, and the coury’s authorities were also unsuccessful in implemeing ai-cyclical policies aimed at neutralizing this trend and supporting the economy. As a result, the profit margin of Chinese companies decreased drastically in the absence of economic growth.
Thielen believes that coinued pressure on the yuan and a lack of growth among the coury’s companies could cause investors to look abroad for investme opportunities.
However, due to strict capital corols in this coury, cryptocurrencies are one of the few channels available. He noted:
Digital currencies are probably one of the few capital outflows from China.
Arthur Hayes, co-founder of the Bitmax exchange, also noted that Chinese capital may already be flowing io gold to pay off US dollar-denominated foreign debt. He also expressed hope that some of these funds will find their way to Bitcoin.
In fact, in late 2016 (1395) and after reports were published that investors in China were increasingly looking to buy Bitcoin with the aim of leaving the coury, this digital currency witnessed such an eve.
At the time, the volume of transactions outside of China indicated a possible correlation between the value of the Chinese yuan and the price of Bitcoin, which finally peaked in late 2017.
However, Edward Engel, cryptocurrency market analyst at Singular Research, argues that conditions have changed and the curre capital flight from China is unlikely to have the same impact on Bitcoin’s price as it did then. He explained:
I don’t think that will happen. The last time this happened was in 2017-2018; Once “junkets” used Bitcoin to support underground banks, but we all know that the Chinese Communist Party closed these routes some time ago.
Engel added:
China has been very smart in preveing capital outflows. As a result, I wouldn’t be surprised if people resorted to older methods.
Junkets were organizations that helped wealthy Chinese gamblers move significa sums of money out of the coury. China has been cracking down on these companies ever since.
However, Thielen believes that despite all these restrictions, there may still be ways for capital to leave China using digital currencies; Such as using domestic electricity to mine Bitcoin or using traders outside the market to buy Tether on the TRON network and send them abroad.
At the time of writing, the price of Bitcoin is hovering around $26,600.
