Recent reports suggest that Chinese authorities hold a significant amount of Bitcoin—approximately 194,000 BTC—largely acquired through judicial actions. This revelation has sparked concerns about a potential downturn in Bitcoin’s market value, as China stands as the second-largest Bitcoin holder globally, following the United States.
How is China Selling Bitcoin?
Despite a nationwide prohibition on cryptocurrency trading, local governments in China are reportedly selling confiscated Bitcoin via third-party intermediaries. It’s estimated that these transactions have generated near $400 million, with local authorities converting the sales proceeds into yuan for municipal budgets.
Could Bitcoin Prices Drop to $40,000?
Legal analysts have indicated that these clandestine sales may contravene the country’s cryptocurrency ban. Lacking a cohesive national policy, local officials are improvising solutions under financial pressure. If this selling trend continues, some predict Bitcoin’s value may plummet to around $40,000. The year 2023 has witnessed a spike in crypto-related offenses within China, although regulatory efforts have recently begun in Hong Kong.
Jiafenxiang, a firm located in Schengen, has facilitated over $400 million in cryptocurrency sales for city governments, further complicating market transparency and increasing risks. Calls for comprehensive regulation of third-party brokerages are growing, as the current climate lacks oversight.
Leviathan warns, “China’s Bitcoin sales could exert negative pressure on prices.”
While these significant sales are taking place, market experts argue that Bitcoin should not face drastic declines due to increasing liquidity and institutional acceptance. Furthermore, the U.S. decision to retain its Bitcoin reserves has alleviated supply pressures in the market.
Authorities are urged to implement stringent regulations to oversee third-party sales and establish monitoring frameworks. The uncertainties surrounding these Bitcoin sales pose challenges for the market, raising questions about their long-term sustainability and overall market impact.
