The relatively positive perception change from China on Bitcoin came as positive news last month. The Chinese legal system recognized Bitcoin as a virtual property and then the Central Bank issue an info-graphic about it.
Moreover, the devaluation of the Chinese currency is continually affected the purchasing power of citizens. However, the narrative of Bitcoin as a safe haven still seems absent from the Country.
In China, Bitcoin is trading more than $110 lower than the global markets. The discount or negative premium suggests that the buying pressure is negligent.
The price of Bitcoin at 14: 00 hours UTC on 11th August is $11, 376, while the sell orders in China are correspondingly placed at around $11,270, with the expectations of buyers extending even lower around $11,160.
The average negative premium or discount on Tether is China is around 1.35%. Dovey Wan, crypto-Analyst brought before the attention of crypto-Twitter, she tweeted,
Tether is now trading at a pretty wide negative premium in China mainland, same with Bitcoin tell me more abt “Bitcoin is a safe heaven asset for the Chinese theory”
As the Chinese currency is depreciating, a departure to USDT or Bitcoin would have been the logical investor move to hedge their losses. However, the above discount suggests that it is not the case.
Moreover, the Chinese Central Banks also announced the expedition of their Digital Renminbi plans. According to sources, the new digital currency will not be built on the blockchain, though it will be compatible with one. Mati Greenspan, the Senior Market Analyst at eToro, recently expressed these doubts and said,
Something tells me that this is a completely different animal from what we know as cryptocurrencies.
The news broke out in China on 5th August 2019 here. While the plans are restricted to payment and settlement, it questions the validity of the use of Bitcoin.
Furthermore, if the ‘safe haven’ narrative is not echoing in China, the Central Bank Digital Currency plans could quickly shake investors confidence in Bitcoin.
Do you think that the Chinese will discard Bitcoin for their digital currency or it will grow as a safe haven there too? Please share your view with us.
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Nivesh from Engineering Background is a full-time Crypto Journalist at Coingape. He is an atheist who believes in love and cultural diversity. He believes that Cryptocurrency is a necessity to deter corruption. He holds small amounts of cryptocurrencies. Faith and fear are two sides of the same coin. Follow him on Twitter at @nivishoes or mail him at nivesh(at)coingape.com