Market analyst Leviathan warns of a potential strategy by China to sell its Bitcoin holdings, which may drive the price down to $40,000. Despite publically opposing cryptocurrency, China has been liquidating confiscated Bitcoin through intermediaries, with local authorities benefiting financially. The conflicting stance raises challenges for national policy, especially as Hong Kong emerges as a possible haven for these assets.
Bitcoin, currently above the critical $80,000 support level, faces potential threats from a reported strategy by China to sell its Bitcoin holdings, as warned by market analyst Leviathan. This action could potentially lower Bitcoin’s price to $40,000, marking only the beginning of a larger initiative by China to manipulate the cryptocurrency market.
Leviathan asserts that despite China’s official opposition to cryptocurrency trading, local authorities have discovered loopholes to monetize confiscated Bitcoin through an underground fiscal strategy. It is estimated that Chinese authorities possess around 194,000 BTC, making them the second-largest government holder after the United States.
Local governments are reportedly utilising private tech companies to offload confiscated Bitcoin on offshore exchanges while adopting clandestine practices. Notably, the Shenzhen-based company, Jiafenxiang, has purportedly executed over $400 million in crypto sales and converted these proceeds for local financial use, highlighting authorities’ reliance on revenue from liquidated cryptocurrencies.
In light of a surge in crypto-related crimes in 2023, amounting to over $59 billion, local authorities are under pressure to generate revenue from fines and crypto confiscations. This inconsistency challenges China’s public anti-crypto rhetoric, necessitating the offloading of coins internationally while seeking minimal oversight from central authorities.
Discussions among legal professionals in China suggest the need for a coherent national policy regarding confiscated cryptocurrencies, featuring proposals for central bank management or the establishment of a sovereign crypto fund. Amid these deliberations, Hong Kong’s favourable legal status for cryptocurrencies presents a viable option for China’s Bitcoin reserve.
This contradiction between China’s public denouncement of cryptocurrencies and its financial gain from sales raises questions about its national policies and potential global financial repercussions. As the U.S. moves towards embracing cryptocurrencies, establishing strategic reserves under former President Donald Trump’s support, China may be pressed to respond meaningfully. Currently, BTC is trading at $84,800, reflecting a 5% increase over the weekly time frame.
