Bitcoin In Peril? Expert Warns Of Chinas Alleged Scheme To Crash BTC To $40,000
As Bitcoin (BTC) attempts to stabilize above the crucial $80,000 support level, a new warning from market analyst Leviathan has raised concerns about an alleged strategy by China that could significantly impact the leading cryptocurrency.
Chinas Secret Bitcoin Strategy
In a recent post on X (formerly Twitter), Leviathan claimed that China plans to sell off its Bitcoin holdings, potentially driving the price down to $40,000. According to the analyst, this move is just the beginning of a broader scheme.
Despite the Chinese governments public stance against cryptocurrency trading, local authorities have found a workaround, he alleges. The expert asserts that they have been quietly cashing in on confiscated Bitcoin, which has led to an underground fiscal strategy that operates in legal ambiguity.
Currently, Chinese authorities are reported to hold approximately 194,000 BTC, making them the second-largest government holder of Bitcoin, just behind the United States.
Leviathan highlights that while the Chinese government publicly denounces cryptocurrency, it simultaneously benefits financially from its underground sales.
Local governments are reportedly improvising their strategies, with some engaging private tech firms to liquidate the confiscated Bitcoin on offshore exchanges. Others, allegedly maintain a more clandestine approach.
The expert provides an example of a relatively unknown company in Shenzhen, Jiafenxiang, that has allegedly facilitated over $400 million in crypto sales on behalf of various city governments, converting the proceeds into yuan and transferring the funds back to local finance departments.
Hong Kong Emerges As Potential Haven For Chinas Confiscated BTC
In 2023, China witnessed a record surge in crypto-related crimes, with over $59 billion tied to illegal activities and more than 3,000 money laundering cases prosecuted.
Amidst this backdrop, local governments are increasingly reliant on the revenue generated from fines and confiscations a significant portion of which comes from liquidated cryptocurrencies.
However, the need for funds is at odds with the governments public anti-crypto stance, forcing officials to offload coins abroad through intermediaries while hoping for minimal interference from Beijing.
There have been discussions among judges, lawyers, and police about the need for a consistent national policy regarding seized cryptocurrencies. Some have proposed that the central bank take control over these assets, while others have suggested establishing a sovereign crypto fund.
Leviathan has pointed to Hong Kong, which, with its more favorable legal framework for cryptocurrencies, has emerged as a potential destination for Chinas Bitcoin stockpile.
This situation presents a unique challenge for China, as the contradiction between its public denouncement of cryptocurrencies and its private profit from them becomes increasingly apparent.
As the US moves toward legitimizing cryptocurrencies at the federal level, including discussions on strategic reserves under President Donald Trump and his ongoing support for crypto, China may find itself compelled to respond, the expert asserts.
Ultimately, Leviathan said that the fate of Chinas 194,000 Bitcoin holdings will not only shape national policies but could also send ripples across the global financial landscape.
At the time of writing, BTC trades at $84,800, registering a 5% surge in the weekly time frame.
Featured image from DALL-E, chart from TradingView.com
Text source: NewsBTC
