Recently, on the social media platform X, former BitMEX CEO Arthur Hayes shared his views and concerns regarding China’s capital flows.
Specifically, he revealed that the Chinese Yuan (CNY) has lost nearly 15% of its value against the US Dollar (USD) since the beginning of the year. Additionally, while China’s foreign exchange reserves have increased by $32.4 billion this year, international net exports have surged to $553.25 billion, resulting in a difference of approximately $520.85 billion.
With the continuous depreciation of the CNY and a significant gap between foreign exchange reserves and international net exports, Arthur Hayes speculates that some of this disparity may have flowed into certain assets, such as gold, overseas USD debt payments for banks and corporations. He particularly emphasizes the possibility that a portion of the funds may have found its way into the cryptocurrency sector, specifically Bitcoin.
However, it’s important to note that China is unlikely to purchase additional US Treasury bonds.
Currently, China’s investment in Bitcoin remains speculative as the country maintains a somewhat tense attitude towards cryptocurrencies. However, certain major cities in China, especially Hong Kong, have shown a more crypto-friendly stance.
In May, the Shanghai People’s Court declared that Bitcoin meets the criteria as a virtual asset protected by Chinese law, despite the ban on cryptocurrency trading in China.
Therefore, China’s investment of billions of USD into Bitcoin and other assets as a hedge against economic fluctuations is not surprising, especially in the context of the weakening relationship between the Japanese Yen (JPY) and CNY.