According to Arthur Hayes, the founder and former CEO of BitMEX, the potential capital flight from China is an important trend to watch and could directly affect the cryptocurrency market.
Capital Flight in China
Data from Google Finance shows that the Chinese yuan (CNY) has declined by over 5% against the US dollar since the beginning of 2023. Hayes stated that he discussed the potential capital flight in China with Andrew Collier, a China analyst and the managing director of Orient Capital Research, on the social media platform X.
Hayes also added that Collier mentioned that the best way to track the potential trend is to measure the difference between China’s net export earnings (subtracting import costs from export revenues) and the country’s foreign exchange reserves (foreign exchange assets held by the central bank of China).
According to Bloomberg, China’s foreign exchange reserves have increased by approximately $32 billion since the beginning of 2023. Data from Trading Economics also shows that China’s trade surplus has been around $553 billion from the beginning of the year until now.
“Hopefully Some of the Capital Finds Its Way to Bitcoin”
In light of all these, Hayes emphasized that it can be said that around $520 billion has left China to do something, highlighting the potential relationship of this issue with the cryptocurrency market:
Some prominent possibilities are: 1) China is buying a lot of gold. 2) China is paying off banks’ and companies’ offshore debts in US dollars. 3) Some wealthy comrades are escaping the coop.
The most important thing that China is NOT doing is BUYING MORE US TREASURIES!
As long as the Japanese yen weakens, the Chinese yuan needs to weaken in order for China’s exports to remain competitive against Japan. Wherever Chinese capital goes, it will continue to flow to YOU. Hopefully, some of the capital finds its way to Satoshi and BTC.
