Dovey Wan: Here’s the Real Reason for Bitcoin (BTC) Demand in China
Dovey Wan, an observer of Chinese activity in the crypto markets and related businesses, commented on the real state of demand for crypto assets.
A mention of China has the power to sway BTC prices. Just days ago, the promise of new legislation coming in the country in 2020 boosted the BTC market price by as much as 42%, bringing it above $10,000 after a slump.
However, the narratives about China may be inaccurate, explains Dovey Wan, co-founder of Primitive Crypto. Rumors and misunderstandings abound, and some of the restrictions are not as heavy in reality.
Specifically, the demand for Bitcoin (BTC) is not a tool to hedge currency risk. Instead, BTC is used as a speculative asset for fast gains. Instead, Chinese investors buy up gold as a hedge for inflation.
The closing of Chinese exchanges is also exaggerated, as most moved to an offshore headquarters, while continuing to reflect the demand of Chinese traders. The crypto asset that facilitates the trades is Tether (USDT), a stablecoin which sees increased OTC exchanges in China.
Selling digital coins and ICOs have also been banned officially. Still, schemes and investments abounded, directly targeting buyers. Plus Token spread almost entirely on social media, managing to take away as much as $4 billion in BTC.
WeChat is also one of the most important tools for spreading information. Most recently, the minting of EIDOS token, as well as DDOS on the TRON network started getting traction. Chat channels also generally point to interest waning or getting renewed.
An altcoin season could also be in the works, especially with the renewed interest in NEO, QTUM, and other projects targeting Chinese investors. Currently, the effect of China goes beyond the narrative, as crypto trading activity has moved to a handful of exchanges serving the Chinese market. OKEx, Binance, and Huobi, still carry significant volumes, with the potential for derivatives trading to increase BTC speculation.