Is China Quietly Building a Strategic Bitcoin Reserve to Challenge the US?

Tags: bitcoin, china, reserve

Key Takeaways:

• Recent reports suggest that China is accelerating efforts to build a strategic Bitcoin reserve as US regulations evolve.
• Bitcoin prices may rise as Chinese economic stimulus measures drive capital back into Bitcoin toward the end of the quarter.
• Bitcoin market dynamics are shifting amid escalating Sino-US tensions.

Rumors and speculation abound in the world of cryptocurrency, and in the middle of it all are two global superpowers — China and the U.S. While President Trump and US legislators openly talk about a national digital asset stockpile, in the other important world economy, whispers from Beijing suggest something a bit more sneaky is in play – that it is building a Bitcoin strategic reserve. Is China positioning to unseat the US’s dominance in the digital currency space? So, let’s unpack the evidence and consider what it means.

Geopolitical Machinations, Bitcoin Stumbles

The price of Bitcoin remained volatile over the past week, trading around the $90,000 level. Having briefly slipped under $80,000, Bitcoin was back above $90,000 after what many are taking as a substantial confirmation from Trump administration Commerce Secretary Howard Lutnick.

In an unexpected move, Elon Musk issued a warning about crypto prices, just as rumors intensified regarding China’s potential economic stimulus measures. Historically, these kinds of measures have often led to increases in risk assets, including Bitcoin, as excess capital seeks opportunities.

Bitcoin Price Weekly Analysis: China Triggers Economic Stimulus

Some have been particularly vocal, such as Arthur Hayes, cofounder of cryptocurrency exchange BitMex and investment fund Maelstrom, about how China’s actions could impact Bitcoin’s price. In a recent blog post, he warned: “Watch out for China.” Before the world — dominated by the U.S. — can go about reflating its economy and send Bitcoin surging past $1 million, there will come a “final filthy fiat financial market convulsion,” Hayes says.

Hayes further explained China’s approach, suggesting that President Xi Jinping aims to maintain the yuan’s stability against the dollar. Hayes argued that if the US dollar supply increases, Xi would likely order the People’s Bank of China to increase the yuan supply to stabilize the exchange rate.

Recent remarks by People’s Bank of China Governor Pan Gongsheng suggest this idea is in the works, as the bank plans to cut interest rates and pump liquidity into the financial system via the lowering of the reserve requirement ratio for banks “at an appropriate time.”

We also learned that in response to trade tariffs imposed by the Trump administration, which could become a global trade war, China is reportedly moving to accelerate stimulus plans In November, China announced a massive $1.4 trillion debt package to relieve financial pressures on local governments and stabilize slowing economic growth.

“In previous instances when China has ramped up monetary stimulus and injected excess liquidity into the system, in 2015 and in 2020, excess liquidity found its way into alternative assets,” the spokesperson for the crypto platform Nexo said. “Such stimulus could have broader implications for global markets, increasing appetite across equities and alternative assets.”

Similar Stories: China Stimulus and the Rise of Bitcoin

It helps to look at historical precedents to see what a potential “China stimulus” effect might mean for Bitcoin.

• 2015: China dealt with an economic slowdown, and thus undertook a string of interest rate cuts and reserve requirement ratio cuts. This added liquidity to the market, and while it’s hard to measure exactly how much, a portion of it went into Bitcoin, and helped its price rise over time.
• 2020: A global crisis due to the COVID-19 pandemic. China responded with a massive stimulus program focused on infrastructure projects and monetary easing. Once more, much of that liquidity spilled into non-fiat assets such as Bitcoin — contributing to the following bull run.

It’s important to remember that correlation is not causation. Other factors, such as increasing institutional adoption, regulatory developments, and technological advancements, also contributed to Bitcoin’s growth during these periods. It’s also important to note that in 2021, China banned crypto trading and mining. This makes investing in Bitcoin now seem counterintuitive for China.

Is China Now Bitcoin’s Secret Weapon? Rumor Mill Intensive

Beyond economic stimulus measures, a more intriguing possibility is emerging: China potentially establishing a strategic Bitcoin reserve.

David Bailey, CEO of Bitcoin Magazine parent BTC Inc and Trump campaign Bitcoin strategy adviser, sparked the speculation in an X post: “China is now working double time to stand up their own Strategic Bitcoin Reserve.” He also said that closed-door discussions on the subject have been taking place since the election.

David Bailey’s post on X.

China is now working double time to stand up their own Strategic Bitcoin Reserve.

They’ve been holding closed door meetings on the topic since the election.

— David Bailey🇵🇷 $0.85mm/btc is the floor (@DavidFBailey) March 2, 2025

According to analyst Vivian Nguyen, Beijing may see Bitcoin as a crucial tool in its broader de-dollarization strategy, aiming to reduce reliance on the US economic framework.

If true, this step aligns well with Beijing’s broader de-dollarization strategy, which includes yuan internationalization, significant gold acquisitions, and the expansion of the BRICS economic bloc.

A Bitcoin reserve would allow China to diversify its balance sheet with a decentralized, non-sovereign store of value, reducing reliance on the dollar and exposure to Western financial sanctions.

This adds to the uncertainty, as it contradicts earlier reports suggesting that China had sold off a significant portion of its Bitcoin holdings. According to CryptoQuant CEO Ki Young Ju, China recently cashed out 194,000 BTC, which was originally seized from the PlusToken scam in 2019.

The PlusToken Seizure: A Twisted Web

The PlusToken scam was a huge Ponzi scheme that defrauded investors of billions of dollars in cryptocurrency. Chinese authorities seized the bulk of the stolen funds (194,000 Bitcoin).

The fate of the seized Bitcoin remains a topic of intense discussion. Some believe China never sold the Bitcoin, with the government securely storing it away, and others believe they were sold off to prevent market damage. The lack of transparency has intensified speculation and given rise to conspiracy theories.

US vs. China Bitcoin Cold War?

China remains secretive about its objectives, while the US has adopted a more transparent stance on digital assets. The US has the largest Bitcoin reserve in the world, with over 198,000 BTC (about $18 billion at the current market price), according to Arkham Intelligence.

US lawmakers are currently lobbying for state-level Bitcoin adoption, while the Trump administration is considering a national digital asset stockpile that would hold Bitcoin, ETH, and other crypto-assets.

These differing strategies suggest a potential “Bitcoin Cold War” between the United States and China.

Bitcoin Initiatives at the State Level in the US

Many US states are at the forefront of adopting Bitcoin and blockchain technology.

• Wyoming: Legally recognizes digital assets as property and has introduced regulations around crypto businesses.
• Arizona: Has looked into accepting Bitcoin for tax payments.
• Miami: Mayor Francis Suarez has long been an outspoken advocate for Bitcoin, and has pushed the city to embrace crypto-friendly policies.

Ohio Prepares for a Crypto Future: State Proposes Tax Cuts, Mining Benefits, and Pension Fund Investments

The initiatives represent a sign of growing acceptance of Bitcoin within the US political system and have the potential to pave the way for broader adoption in the future.

Industry View: Range of Perspectives

These speculations about China creating a Bitcoin base have had a mixed response among experts from the crypto space.

• Skeptics: Others remain skeptical, pointing out that past actions by China to restrict cryptocurrency transactions suggests a strategic reserve is unlikely. They say the 2021 ban on crypto trading and mining is proof of China’s anti-crypto approach.
• Believers: Others think that China undermining the dollar could be part of a larger strategy to challenge its dominance and diversify its financial holdings. Bitcoin, they suggest, is a major attraction for radical transparency with its decentralized structure compared to the mainstream assets.
• Cautious Optimists: A third group is more cautious, recognizing the potential for a Bitcoin reserve, arguing that only time will tell and more hard evidence is needed. That leads them to speculate that China might be playing a long game by quietly accumulating Bitcoin while striking a public pose of hostility toward cryptocurrency.

The Role of Bitcoin in De-Dollarization

Perhaps the strongest motivation for China to stock a Bitcoin reserve lies on the de-dollarization front.

China has long sought to reduce its reliance on the US dollar, the world’s reserve currency. Bitcoin’s decentralized nature makes it a viable alternative to traditional monetary systems controlled by central banks.

This would allow China to insulate itself from US financial sanctions and take control of its own monetary policy by accumulating Bitcoin.

A Dangerous Bet or a Strategic Play?

Based on available data, it is evident that China has a strong interest in Bitcoin and its potential. However, speculation over establishing a strategic Bitcoin reserve, while contentious, indicates a broader vision and a desire to lessen reliance on the West’s traditional financial system.

But it is also a dangerous gamble. The cryptocurrency market remains highly volatile, and China’s Blockchain policy continues to be inconsistent. It’s still an open question though whether the Chinese government will be able to successfully straddle the line between benefitting from Bitcoin while controlling the potential risks.

How all this — and the importance of Bitcoin’s future — will play out with China will be something to keep within the confines of the story for years to come. Regardless of the outcome, China’s role in the cryptocurrency space is likely to leave a lasting impact on global markets and push other nations to reassess their strategies.

Final Thoughts — The Human Factor In Crypto Speculation

Amid the candlestick patterns, geopolitical maneuvers, and market speculation, it’s easy to overlook the human element. Even by Internet standards, the crypto world is populated by true believers, convinced that decentralization is the future and financial liberation is just around the corner.

Rumors surrounding China’s Bitcoin activities continue to fuel both fear and optimism. Whether China’s aims are altruistic or self-serving, the direction they take will affect the lives of millions across the globe.

As we sail through the uncharted waters of this new tech frontier, let’s not forget to keep our wits about us and our eyes open, and that, for every Bitcoin transaction, there’s a story of a human being on the other side.