Recent developments reveal that Chinese local governments have been offloading a significant portion of their Bitcoin reserves, approximately 15,000 BTC valued around $1.4 billion, while simultaneously boosting their gold acquisitions to record levels. This shift reflects a strategic pivot towards traditional safe-haven assets amid ongoing geopolitical tensions and economic uncertainties.
Despite the nationwide ban on cryptocurrency trading imposed since 2021, Chinese authorities have been managing a growing cache of cryptocurrencies seized from illicit activities. Local governments, holding an estimated total of about 194,000 BTC (worth roughly $16 billion), have been navigating a complex legal landscape without clear national regulations on handling these digital assets. To convert seized cryptocurrencies into usable funds, they have enlisted private firms to sell Bitcoin offshore, with proceeds converted into yuan to support strained local budgets.
This mass liquidation of Bitcoin coincides with a surge in gold prices, which recently reached around $3,340 per ounce, as investors worldwide seek refuge from market volatility driven by the escalating U.S.-China trade tensions. Gold ETFs have attracted substantial inflows, now commanding about $150 billion in assets, overshadowing Bitcoin ETFs, which hold approximately $93 billion. This trend underscores gold’s enduring role as a trusted store of value in times of crisis, contrasting with Bitcoin’s recent struggles to maintain its safe-haven status, trading near $84,500 after a notable decline from its earlier highs.
Legal experts and industry insiders in China are calling for more standardized regulations to govern the management and liquidation of confiscated cryptocurrencies, warning that the current patchwork approach risks corruption and abuse. Some propose that the People’s Bank of China could take charge of these assets, potentially creating a sovereign crypto reserve similar to initiatives underway in the United States, where a Strategic Bitcoin Reserve has been established using forfeited crypto assets from criminal cases.
In summary, China’s recent sale of a substantial Bitcoin stockpile and its increased investment in gold highlight a broader reassessment of asset security amid geopolitical and economic pressures. While Bitcoin remains a significant national holding, gold’s historical reliability is currently favored by Chinese authorities and investors alike, signaling a notable shift in the country’s approach to financial reserves and risk management.
