In response to China’s economic difficulties, investors are turning to Bitcoin and other digital currencies as a form of financial protection. This trend is reflected in the increasing transactions handled by Chinese over-the-counter (OTC) crypto brokers, as reported by Chainanalysis. Additionally, the Bank of China’s recently announced economic stimulus plan might also positively impact Bitcoin.
Chinese Investors Move To Bitcoin
A study conducted by Chainalysis reveals that Chinese investors were already investing in Bitcoin well before the Bank of China announced its stimulus policy. The findings indicate that over-the-counter (OTC) brokers in China received approximately $20 billion each quarter from July 2020 to June 2021, accumulating a total inflow of $75.4 billion over this period.
2021 saw China prohibiting the exchange of Bitcoin, as well as other digital currencies. Yet, this move demonstrates a robust interest in these virtual assets, such as BTC. Eric Jardine, who leads cybercrime research at Chainalysis, suggested that these Over-The-Counter (OTC) services may reside within the “grey area” of China’s economic landscape, given the restrictions on both trading and mining activities related to cryptocurrencies. He further implied that it might be the case that the enforcement of this ban is not strict.
Regardless of the situation, it’s clear that these Chinese investors, understanding their country’s struggling economy, viewed Bitcoin (BTC) and other cryptocurrency tokens as a potential means to safeguard their assets. In an effort to revitalize the economy, the Governor of the People’s Bank of China, Pan Gongsheng, announced several measures including reducing the reserve requirement ratio by 50 basis points, lowering key short-term interest rates by 20 basis points, and implementing monetary stimulus.
At the same time, alongside increasing Chinese investor enthusiasm towards cryptocurrencies, it’s worth considering other factors suggesting a rise in crypto usage within China. For example, Russia’s efforts to regulate cryptocurrencies imply that they may shift their international trade transactions with China from the US dollar to digital currencies.
BTC Price To Benefit From China’s Stimulus Policy
Bitcoin soared to $64,000 after the Bank of China implemented its stimulus policy, which is seen as positive for BTC because it might encourage Chinese investors to invest more in Bitcoin and other digital currencies. According to a report from CoinGape, if China’s stimulus package and trade with Russia continue, Bitcoin’s price may reach $100,000.
Market analyst Dan Tapiero recently pointed out that the country’s interest rate reductions are favorable for Bitcoin, a view shared by Raoul Pal, founder of Real Vision. Moreover, QCP Capital, a trading firm, expressed their belief that China’s central bank will implement further easing measures while suggesting that the overall economic landscape appears advantageous for Bitcoin.
In the same vein, China recently reduced interest rates, happening only a week after the U.S. Federal Reserve made a 0.5% reduction. These significant financial occurrences are contributing to experts’ predictions that Bitcoin could reach a new record high in the near future. Notably, the last quarter of the year is traditionally the most lucrative period for Bitcoin.
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2024-09-25 14:47