Chinese investors are now seeking refuge in Bitcoin and other cryptocurrencies as the country's economy struggles. This is evident in the inflow experienced by the country's over-the-counter (OTC) crypto brokers, based on a report by Chainalysis. The Bank of China recently announced a stimulus policy to help revive the economy, which could also benefit BTC.
A report by Chainalysis shows that Chinese investors have turned to Bitcoin long before the Bank of China announced its stimulus policy. According to the study, inflows to OTC brokers in China have reached up to $20 billion in each of the three quarters through June. During these nine months, these brokers have recorded total inflows of $75.4 billion.
In 2021, China will ban the trading of Bitcoin and other cryptocurrencies. However, this proves that there is still a huge demand for these digital assets, including BTC. Eric Jardine, head of cybercrime research at Chainalysis, noted that these OTC services are likely to operate in the "gray zone" of the country's economy, given the ban on cryptocurrency trading and mining. He added that perhaps the ban was not strictly enforced.
Regardless, it is clear that Chinese investors who are aware of their country's economic weakness see BTC and other cryptocurrencies as a viable alternative to protect their wealth. To revive the economy, the Governor of the People's Bank of China (PBoC), Pan Gongsheng, announced a 50 bps reduction in the reserve requirement ratio, a 20 bps reduction in key short-term interest rates, as well as monetary stimulus.
BTC price rose to $64,000 following the Bank of China's stimulus policy. This move is considered positive for BTC as it could increase the confidence of Chinese investors to invest in leading crypto and other digital assets.
Meanwhile, China's interest rate cut comes just a week after the US Federal Reserve announced a rate cut of 50 basis points (bps). These macro events are among the reasons analysts expect BTC to hit an all-time high (ATH) in the near future.
