It appears that economic fears and uncertainty as a result of the ongoing protests in Hong Kong are driving people towards Bitcoin as a safe haven for storing wealth.
The Hong Kong protests began as opposition to the Fugitive Offenders Amendment Bill which gives authorities the power to extradite criminal fugitives to countries with which no previous extradition agreements have been made – including mainland China. This essentially means residents of Hong Kong lose their autonomy from mainland China, something that citizens feel undermines their civil liberties and threatens Hong Kong’s independent status. Formerly a British colony, Hong Kong rejoined China in 1997 with the agreement that it would maintain its own political and economic systems for 50 years.
As a further result of problems arising from the attempted amendment, protesters are now demanding investigations into police misconduct and a revival of democratic reforms that have fallen stagnant since the 2014 ‘Umbrella’ revolution.
Bitcoin as a safe haven
Although China has begun expanding its ban on cryptocurrencies this year, Hong Kong maintains no legislative or regulatory framework around Bitcoin and cryptocurrencies. Now it would appear that Hong Kong residents, fearing for the economic future of their home, are scrambling to move money into Bitcoin for safekeeping.
Earlier today, eToro senior analyst Mati Greenspan noted on Twitter that Hong Kong has reached its highest-ever trading level on popular Bitcoin peer-to-peer exchange platform Localbitcoins. This is despite the fact that Bitcoin is still considered a highly volatile asset by most – highlighting just how desperate the situation in Hong Kong has become.
In addition to a safe haven, many locals see cryptocurrencies as a way to escape the overbearing scrutiny of the Chinese government, which closely monitors its citizen’s finances. Despite the restrictions, it is believed that many mainland Chinese citizens are also using Bitcoin as a hedge against economic troubles following tariffs imposed on Chinese goods by the U.S. government.
The overall crypto market remains bearish
While the surge in Hong Kong trading may have given Bitcoin a minor boost, the overall cryptocurrency market remains in a downward slide. In September, the total market cap for cryptocurrencies dropped by 14 percent, down from $273 billion on September 3rd to current levels of around $217 billion. Bitcoin’s market dominance has continued to grow though, reaching a yearly high of 78 percent on September 24th.
Mark Hartley is a Microsoft-qualified IT professional and freelance writer specializing in travel and technology. He has traveled to 53 countries worldwide and spent time working on the trading floors of some of the biggest interdealer brokers in London, where he helped integrate cryptocurrency technology into the IT trading infrastructure. You can contact him on twitter @splshrollstmble or via email at firstname.lastname@example.org. *All information provided here is for educational purposes only and should not be taken as financial advice.
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