Bitcoin returned to the $70,000 mark last night, and BitMEX founder Arthur Hayes also released “Refuel Bitcoin,” which explores the current situation of the Chinese economy and its impact on Bitcoin, as well as his optimistic view of the future of Bitcoin.
Current Situation of the Chinese Economy
China is facing the problem of a burst real estate bubble, leading to reduced economic activity and rising unemployment. As a result, the Chinese government has adopted the “three red lines” policy to restrict excessive borrowing by real estate developers, further exacerbating the market’s plight. The Chinese government is currently using quantitative easing (QE) and other monetary policy tools to stimulate the economy, including purchasing government bonds and injecting capital to support the banking system.
Revival of the Chinese P2P Market
Hayes believes that the Chinese are some of the most resourceful people on the planet and they will not allow their precious savings in Renminbi to remain idle in a situation where asset prices are encouraged to inflate in Beijing. While Bitcoin is not a foreign concept to middle and upper-income residents in coastal cities, even though these exchanges are prohibited from providing visible Bitcoin/Renminbi trading pairs, Bitcoin and cryptocurrencies are still thriving in China. Hayes has heard that the P2P market in China is once again active, with all major Asian spot exchanges such as Binance, OKX, and Bybit doing business in the mainland, and local traders are assisting mainland residents in trading cryptocurrencies through the exchanges’ P2P message boards. Although Hayes cannot show Bitcoin tracking products or related charts flowing into China due to data restrictions, he does know that stocks and real estate are underperforming the growth of the central bank’s balance sheet.
QE Takes Time, Bitcoin Refuels
Hayes emphasizes that the re-acceleration of quantitative easing by the People’s Bank of China and the growth of bank credit will take time, and one cannot expect the market to immediately realize and immediately drive up Bitcoin. But in these initial stages, the reaction of Chinese savers is as he expected, with purchases of oversold domestic stocks and heavily discounted apartments. Hayes believes that now is a good buying opportunity, as when wealthy coastal residents decide they must own Bitcoin at any price, the upward price movement will retrace to August 2015, when Bitcoin surged from $135 to $600 in less than 3 months after the People’s Bank of China significantly devalued the Renminbi, almost quintupling in value.