The crypto community is abuzz with speculations over China probably creating a Bitcoin reserve, which former Binance CEO Changpeng Zhao (CZ) has reignited at the Bitcoin MENA Conference 2024 in Abu Dhabi. This conversation comes after the U.S. announcement that it will establish a Bitcoin Reserve as outlined under Trump’s crypto policy.
With time, if such developments will become true, they would then ignite a new phase of hyperbitcoinization by putting mainstream Bitcoin adoption by the world’s national governments into operation.
The U.S. Bitcoin Reserve and the Hyperbitcoinization Race
The concept of hyperbitcoinization, in which Bitcoin has become the most prominent financial asset adopted by governments globally, has been discussed in the crypto sphere for some time. The U.S. Bitcoin Reserve announcement makes the idea a little more concrete. Attached to Trump’s pro-Bitcoin stance, this policy shift is a domino effect of others racing to amass Bitcoin before being left out of this global financial change.
During the Bitcoin MENA Conference, Changpeng Zhao was joined by high-profile attendees, such as Eric Trump, Sheikh Nahayan Mabarak Al Nahyan, and Justin Sun, to discuss this revolutionary moment. Changpeng Zhao highlighted strategic implications around hyperbitcoinization: the central banks are already in a race to accumulate more Bitcoin reserves. He likened Bitcoin to be the only “hard” asset governments would be looking to hold in the same way they would with gold reserves.
Changpeng Zhao’s reason behind this was a hunch about how China could use such history to adopt a Bitcoin reserve strategy, as the inexorable tide of Bitcoin towards eventual monopoly might nudge Beijing towards action. “They could move really, really fast if they wanted,” said Changpeng Zhao, musing about China quietly building a stock of Bitcoins and then bursting onto the global scene and economically leveraging the asset for political influence.
Are Countries Already Accumulating Bitcoin Reserves?
While much of the conversation around the world’s Bitcoin reserve is speculation, reports of actual secret accumulation have been recorded in several nations. Several nations have made public declarations of Bitcoin strategy, the most notable of which El Salvador has declared as legal tender, but several others are building their respective books in secret.
For example, while Britain has been relatively conservative about cryptocurrency regulation, it was discovered that it had a substantial quantity of Bitcoin, 61,000 BTC, which its National Crime Agency confiscated. This would suggest that countries secretly amassing reserves by direct accumulation or holding confiscated assets.
At the Bitcoin MENA Conference, there is a rumour that silent accumulation might be more rampant than has been publicized. Prince Filipe of Serbia hinted at the national inflows as part of what contributed to Bitcoin’s surge in price to $100K. That adds to the speculations regarding the covert efforts to build reserves. “Bitcoin strategic reserves are already happening behind closed doors,” he confirmed, speaking of a situation where countries prepare themselves before they make public declarations or policies.
Implications of a Chinese Bitcoin Reserve
The possibility that China could create a Bitcoin reserve has far-reaching international implications. It would confirm Bitcoin’s status as a strategic asset, and nations would compete vigorously to accumulate it. Most probably, this would push prices for Bitcoin to new heights, making it a global financial instrument.
This, however, would also deviate from China’s historically conservative position on cryptocurrencies. Accepting Bitcoin as part of the national reserve would be a big policy shift and might redefine cryptocurrency’s geopolitics. The ongoing development in the U.S. and China’s response shows how fast the relationship between governments and decentralized digital assets is evolving.
