China’s capital flight and investing in Bitcoin

China is dominating the Bitcoin scene at this point in time. It is reported that the majority of Bitcoin mining takes place within China’s borders and to top that, it is the highest trading market in the world.   Actual traded volume on Bitcoin exchanges is reportedly around 98% however, according to a recent article estimating China’s real traded volume, it is more in the region of 85% – still a very big market.  One should bear in mind that the reported Bitcoin trading volume only records volumes traded on the larger exchanges.  OTC’s (Over the Counter) platform volume is recorded however, actual Peer to Peer trades remain private.  Actual daily traded volume globally is unknown.

The Peoples Bank of China recently introduced a Capital flight law to curb Yuan moving offshore from $50million to $5million – anything over $5million is flagged and government approval is required, clamping down on Mergers and Acquisitions.

What does this mean for Bitcoin?  More Chinese investors are buying Bitcoin to use as a hedge against the falling Yuan.  Recently the Peoples Bank of China met with all the large Bitcoin exchanges and the Bitcoin price plummeted from $1161 to the $770 level in the beginning of January 2017, however, the price recovered somewhat by moving upwards again. After investigation by the PBOC, it was found that the Exchanges are out of line on regulation.  Some of the areas of interest were money laundering, price manipulation and whether KYC documents from clients are collected – no doubt the exchanges will ensure compliance.  As Bitcoin gains momentum and continues on this growth path, more governments globally will apply regulation.  Regulation is seen the legitimacy that will move Bitcoin mainstream.

Watch this short video on “Why Money keeps flowing out of China” Bloomberg

“What’s next for the Yuan?” Bloomberg

Bitcoin Adoption in China


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