In recent news, China has experienced its worst capital flight in almost eight years reaching $49 billion in August, a surprising turn of events generating various ransom theories among analysts. Considering China’s currency, the yuan, is weakening and the capital flight is expanding, some suggest that this situation might indirectly pump Bitcoin market.
Bitcoin has been marred with hoards of scepticism despite its growing popularity among Chinese investors during times of economic decline. With the Chinese economy showing signs of fatigue and the USD/CNY exchange rate at a 17-year high, investors are expected to look for alternatives against the feeble domestic market. Crypto, despite stringent capital controls in China, might turn out to be one such lucrative option as projected by Markus Thielen, head of research and strategy at Matrixport.
Some theories suggest that Chinese capital may already be flowing into gold and paying down U.S. dollar offshore debt, possibly hoping that part of the capital would find its way to Bitcoin. An old narrative played out similarly in late 2016 when Bitcoin was favored by Chinese investors attempting to escape their home market, witnessing Bitcoin’s price peak around late 2017. The big question remains if the same scenario would occur again.
Despite the bullish outlook, some analysts argue otherwise. Edward Engel from Singular Research, expressed doubts about the impact a capital flight would have on Bitcoin today, compared to 2017. China has indeed become more adept at halting capital outflows, thereby significantly reducing the usage of older methods. However, Thielen counters this, suggesting that certain methods might still be available for Chinese capital to utilize crypto, despite restrictions.
On the other hand, in the Ethereum universe, beloved toolkits Ganache and Truffle are sunsetting in the wake of a shift towards MetaMask Snaps and SDK. For many Ethereum developers, this change represents the “end of an era”, initiating nostalgia of their first experiments with smart contracts via these suites. After 90 days the codebases of Truffle and Ganache will remain available only as public archives.
Interestingly, these industry shifts are part of the prevailing uncertainty of the blockchain world, where the future is always one innovation away. Ultimately, whether China’s capital flight will be a boon for Bitcoin or remain a mere hypothesis, only future will tell.
Source: Cointelegraph
