Cryptocurrency industry veterans say Chinese investors are trying to exchange the yuan for other assets, like dollars and bitcoin, because they think the yuan will continue to drop. The biggest advantage of cryptocurrency is that it is not related to the Chinese government. Indeed, this is what makes crypto a good alternative option to local investments that depend on the Chinese government and economy. All the predictions made about the rise and popularity of Bitcoin are becoming true.
Many Chinese are looking to own homes in countries like the U.S. Certainly, the use of crypto has made it easy for the Chinese to invest in American properties. According to Investopedia- returns from conventional state-backed investments have dwindled. Rich Chinese are reportedly hunting for investment opportunities abroad and exchanging local currency for U.S. dollars. In response, the government had instituted capital controls to prevent yuan outflow and a subsequent drop in its value. Bitcoin and other cryptocurrencies offer protection against a slowing economy and capital controls at home.
As Cointelegraph reported, China has long formed a curious focus for Bitcoin analysts despite the state-imposed moratorium on using it. As Bitcoin staged a comeback in 2019, evidence began emerging that consumers were finding alternative on-ramps to traditional exchanges, such as purchasing stablecoin Tether (USDT) via over-the-counter deals.
The People’s Bank of China (PBoC) recently released a warning to citizens that outlined the dangers posed by cryptocurrencies, and specifically Initial Coin Offerings (ICOs). The latest warning came just over a year after the authorities banned ICOs. If China, a country of some 1.4 billion people, does decide to open its doors to bitcoin and crypto, it could be a significant step towards mainstream bitcoin adoption.
Despite the negative sentiment coming from top brass, China still remains a hub for broader blockchain activity. One estimate pegs China as home to 25% of new blockchain projects worldwide. Additionally, tech giants including Alibaba, Baidu, and Tencent have all experimented with enterprise blockchain technology.