BitMEX co-founder Arthur Hayes is outlining how capital from China could flow into Bitcoin (BTC).
In a new analysis, Hayes notes that wealthy Chinese individuals and state-owned enterprises (SOEs) use banks in Hong Kong for international dealings.
Hayes also points out that Hong Kong now has regulated crypto exchanges and brokers.
“Bitcoin is a Chinese phenomenon. Many of the largest Bitcoin miners started their operations in China. Pre-2020, when BTC/CNY (Chinese yuan renminbi) trading pairs were available, Chinese clients dominated global spot trading flows. Any wealthy coastal Chinese person knows about Bitcoin and its promise as a store of value.
They have watched the currency from its infancy until the current moment and have been active participants in its success. If there is a way to legally move cash from the mainland to Hong Kong, Bitcoin will be one of many risk assets that will be purchased.”
Hayes also says the Chinese government has spent the past few years attempting to shift the country’s economy from supply-led to demand-led by making credit more expensive. Firms have responded to this policy shift by borrowing money offshore, driving up the US dollar’s value and making credit more expensive around the globe, according to the BitMEX co-founder.
Hayes says that trend could be on the verge of reversing, however.
“That bid for dollar credit and liquidity will be removed as the Chinese banking system provides more plentiful yuan credit.
Given that the dollar is the world’s largest funding currency, if the price of credit falls, all fixed supply assets like Bitcoin and gold will rise in dollar fiat price terms. The great part about this macro pillar of bullishness is that it doesn’t require Chinese firms and wealthy individuals to buy any Bitcoin. The fungible nature of global fiat credit will dictate that the marginal fiat dollar will flow into hard monetary assets like Bitcoin.”
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