At the Bitcoin MENA conference in Abu Dhabi, Changpeng Zhao (CZ), former CEO of Binance, said it is “inevitable” that China will establish a strategic bitcoin (BTC) reserve. CZ pointed out that although China's stance on cryptocurrencies is difficult to predict due to the government's lack of transparency, it is likely that the country will accumulate bitcoins before officially announcing such a reserve.
China secretly hoarding bitcoin?
Former Binance CEO Changpeng Zhao mentioned he had yet to see evidence that the Chinese government was hoarding bitcoin, but he insisted it was only a matter of time before that this does not happen. He added that China could “move very, very quickly” on policy if it wanted to.
CZ explained that China could follow the example of the United States, where the incoming presidential administration proposed a plan to establish a strategic bitcoin reserve. According to him, “smaller countries” would likely be the first to adopt a BTC reserve, but China could move quickly once it decides to do so.
What future for BTC?
The idea of a national bitcoin reserve was popularized by the campaign promises of Donald Trump, who proposed that the United States hoard one million BTC. Critics of this plan suggest that it would only benefit bitcoin holders, likely increasing the price, if the US government purchased and held such a quantity of cryptocurrencies.
If China and the United States establish a bitcoin reserve, the BTC price would likely increase significantly. This increased demand, from two major economies, would create scarcity in the market, thereby pushing prices higher due to the limited supply of bitcoins.
In sum, although China has yet to officially announce a bitcoin reserve, Changpeng Zhao's statements suggest that this could be an inevitable strategic step for the country. The question remains when and how China will decide to make this crucial move into the world of cryptocurrencies, potentially setting up a $1.4 trillion shock.
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