Outside Source
Key Takeaways:
- Recent reports suggest that China is accelerating efforts to build a strategic Bitcoin reserve as US regulations evolve.
- Bitcoin prices may rise as Chinese economic stimulus measures drive capital back into Bitcoin toward the end of the quarter.
- Bitcoin market dynamics are shifting amid escalating Sino-US tensions.
Rumors and speculation abound in the world of cryptocurrency, and in the middle of it all are two global superpowers — China and the U.S. While President Trump and US legislators openly talk about a national digital asset stockpile, in the other important world economy, whispers from Beijing suggest something a bit more sneaky is in play – that it is building a Bitcoin strategic reserve. Is China positioning to unseat the US’s dominance in the digital currency space? So, let’s unpack the evidence and consider what it means.
Geopolitical Machinations, Bitcoin Stumbles
The price of Bitcoin remained volatile over the past week, trading around the $90,000 level. This volatility underscores Bitcoin’s growing role as a geopolitical asset, with its price increasingly influenced by global macroeconomic policies and diplomatic tensions. Having briefly slipped under $80,000, Bitcoin was back above $90,000 after what many are taking as a substantial confirmation from Trump administration Commerce Secretary Howard Lutnick. This price movement also reflects investors’ sensitivity to geopolitical developments, highlighting Bitcoin’s increasing role as a hedge against economic uncertainty.
In an unexpected move, Elon Musk issued a warning about crypto prices, just as rumors intensified regarding China’s potential economic stimulus measures. Historically, these kinds of measures have often led to increases in risk assets, including Bitcoin, as excess capital seeks opportunities.
Bitcoin Price Weekly Analysis: China Triggers Economic Stimulus
Some have been particularly vocal, such as Arthur Hayes, cofounder of cryptocurrency exchange BitMex and investment fund Maelstrom, about how China’s actions could impact Bitcoin’s price. In a recent blog post, he warned: “Watch out for China.” Before the world — dominated by the U.S. — can go about reflating its economy and send Bitcoin surging past $1 million, there will come a “final filthy fiat financial market convulsion,” Hayes says. If China injects substantial liquidity, it could amplify Bitcoin’s price swings, attracting more speculative trading activity in both Asian and Western markets.
Hayes suggested that President Xi Jinping seeks to keep the yuan stable against the dollar, directing the People’s Bank of China to adjust the yuan supply if the U.S. dollar expands.
Recent remarks by People’s Bank of China Governor Pan Gongsheng suggest this idea is in the works, as the bank plans to cut interest rates and pump liquidity into the financial system via the lowering of the reserve requirement ratio for banks “at an appropriate time.”
We also learned that in response to trade tariffs imposed by the Trump administration, which could become a global trade war, China is reportedly moving to accelerate stimulus plans. In November, China announced a massive $1.4 trillion debt package to relieve financial pressures on local governments and stabilize slowing economic growth. A Nexo spokesperson noted that past Chinese monetary stimulus in 2015 and 2020 led to excess liquidity flowing into alternative assets, potentially impacting global markets by boosting demand for equities and other investments.
Is China Now Bitcoin’s Secret Weapon? Rumor Mill Intensive
Beyond economic stimulus measures, a more intriguing possibility is emerging: China potentially establishing a strategic Bitcoin reserve.
David Bailey, CEO of Bitcoin Magazine parent BTC Inc and Trump campaign Bitcoin strategy adviser, sparked the speculation in an X post: “China is now working double time to stand up their own Strategic Bitcoin Reserve.” He also said that closed-door discussions on the subject have been taking place since the election.
China is now working double time to stand up their own Strategic Bitcoin Reserve.
They’ve been holding closed door meetings on the topic since the election.
— David Bailey🇵🇷 $0.85mm/btc is the floor (@DavidFBailey) March 2, 2025
Beijing may view Bitcoin as part of its de-dollarization strategy, reducing reliance on the U.S. financial system. This aligns with its efforts to internationalize the yuan, increase gold reserves, and expand the BRICS economic bloc. A Bitcoin reserve would allow China to diversify its balance sheet with a decentralized, non-sovereign store of value, reducing reliance on the dollar and exposure to Western financial sanctions. The potential use of Bitcoin as a financial hedge against Western sanctions could provide China with an alternative settlement mechanism for international trade.
This adds to the uncertainty, as it contradicts earlier reports suggesting that China had sold off a significant portion of its Bitcoin holdings. According to CryptoQuant CEO Ki Young Ju, China recently cashed out 194,000 BTC, which was originally seized from the PlusToken scam in 2019.
Related News: Ohio Prepares for a Crypto Future: State Proposes Tax Cuts, Mining Benefits, and Pension Fund Investments
Rumors surrounding China’s Bitcoin activities continue to fuel both fear and optimism. Whether China’s aims are altruistic or self-serving, the direction they take will affect the lives of millions across the globe.
This article first appeared at CryptoNinjas
