Capital outflows from China - not BTC ETFs or Halvings - drive the BTC price

[Peter90]

According to Zerohedge, BTC surged not because of previous halving or the introduction of BTC ETFs in January etc... It was primarily due to capital outflowing from China.
So that if you want to know whether BTC will go up or down you should look at China's capital outflows figures.

This is the article



October 2023:

..........



And while conventional wisdom is that this surge in the price of the digital currency was largely due to the January launch of Bitcoin ETFs, what many missed was a Reuters story in January which confirmed that ... it is China's massive wall of inert capital that has been the biggest driver of bitcoin moves, and never more so than during periods of FX and capital outflows which usually precede some form of capital controls.

This was the Reuters story:






We hope that we don't have to remind readers that the first big trigger for bitcoin's unprecedented eruption higher starting in 2015 was - you guessed it - China's August 2015 FX devaluation*



*FX = forex
FX devaluation = devaluation of the RMB/Yuan



We bring all this up because six months after our first correct prediction that China's spike in FX outflows would send bitcoin surging, it's time to do it again.

So don't be surprised if in the next 6 months Bitcoin doubles again, and the move has nothing to do with ETF inflows, the halving, or frankly anything else taking place in the US... and instead is entirely driven by China's massive wall of money which at last check was almost 3x bigger than the US.

[Lucius]

Interesting theory, although I find it hard to believe that the spot ETFs had nothing to do with the rise in the price of BTC considering that they bought over 500 000 BTC in the last three months. It's true that more than half of those BTC just flowed from Grayscale mainly to BlackRock, but it still doesn't seem logical to me that Chinese investors get all the credit.

Anyway, we will be able to verify this theory in about 6 months, and if it really happens that the price doubles, we will be able to take into account that we are looking in the wrong direction all the time and that China has a much greater influence on the price of BTC than the West.

[Peter90]

Interesting theory, although I find it hard to believe that the spot ETFs had nothing to do with the rise in the price of BTC considering that they bought over 500 000 BTC in the last three months. It's true that more than half of those BTC just flowed from Grayscale mainly to BlackRock, but it still doesn't seem logical to me that Chinese investors get all the credit.

Yes, maybe the point of the article was not "BTC ETFs have no bearing" but rather "Capital outflows from China have a bearing too"


Something I don't understand.
What is the cause of those outflows?
The article identify 2:
a) devaluation of the Yuan (= Yuan losing power vs other currencies, so people try to save into those currencies)
b) capital controls by the authorities

Ok, but the two don't necessarily go hand in hand. There can be the one without the other.
So which one is the main cause for those capital outflows?

[hugeblack]

China's capital outflows figures do not necessarily mean that it will move directly to Bitcoin. It is just like the articles that try to link the price of Bitcoin to the American stock market and how there is a similarity that has occurred in the last 3 months, with complete disregard for the charts of the past months and years.

[Lucius]

~snip~
So which one is the main cause for those capital outflows?

I assume that rich Chinese who have seen the world know what kind of country they actually live in, so even though China is not a problem for them when it comes to doing business, for some other things they prefer to choose other countries, and then they want to somehow transfer their money there. Although one of the reasons why the Chinese officially banned Bitcoin was that it was part of a "dirty industry", it is no secret that their main problem was that they could not control the outflow of money out of the country that went through Bitcoin.

I therefore think that a part of the Chinese just wants to get as much money out of China as possible, and that they use all possible methods for that, one of which is certainly Bitcoin.

[joniboini]

Yes, maybe the point of the article was not "BTC ETFs have no bearing" but rather "Capital outflows from China have a bearing too"

If that was the goal, wouldn't the conclusion feel a bit too naive? They confidently said that it has nothing to do with ETF, halving, etc. I fail to see how they can say that but imply that halving or other things also contribute to BTC price movement. Even if we can accept that China's pump contributes heavily to BTC price movement, there is not enough data to ignore other factors, heck who's to say this outflow is not driven by halving? I believe they're drawing the wrong conclusion or have many loaded assumptions that are not explained when they analyze the market. CMIIW.