Bitcoin is hoping to become a hot property in Hong Kong.
The region’s political crisis has swept over its banking sector, which is now seeing protestors withdrawing large bundles of cash out of ATMs.
The move is the latest tactic to reduce People’s Bank of China’s influence on the Hong Kong economy. Protestors have warned that they would withdraw as much Hong Kong dollars (HKG) as they can. They would further exchange their cash holdings for the US dollar as a strategy to protect their assets and to show the Chinese government that they are in full control.
Cryptocurrency evangelists believe the disturbing scenario could fuel bitcoin’s demand in Hong Kong. Influential Twitterati Rhythm Trader said on Wednesday that protestors would eventually want to park their cash in non-sovereign assets like bitcoin.
BREAKING: Hong Kong activists are calling for a run on Chinese banks tomorrow, asking that everyone withdraw their money on the same day.
One of the best ways to peacefully protest, the next step is buying bitcoin!
— Rhythm (@Rhythmtrader) August 15, 2019
HK$70 Million Out of Chinese Banks, Already
The Hong Kong student who launched the “peaceful protest” claimed that protestors have already withdrawn more than HK$70 million. Meanwhile, many participants shared their withdrawal receipts on a Telegram channel dedicated to Hong Kong protests, which has over 1,500 members already.
“This may work because Carrie Lam and the PRC care much about the economy,” the Hong Kong student told Insider, adding that he and others like him would stop if the Chinese government fulfills their five demands. They are:
“Completely withdraw the extradition bill; retract the proclamation that the protests were riots; withdraw criminal charges against all protesters; thoroughly investigate abuse of powers by the police; dissolve the Legislative Council by administrative order, and immediately implement dual universal suffrage.”
LIHKG, a Chinese version of social media platform Reddit, saw mounting discussions about the proposed Hong Kong bank run. One of the posts, written by an activist, discussed how the Hong Kong dollars would continue to remain pegged to the US dollar this year. But eventually, a more massive capital outflow would disturb the balance between the two currencies, damaging the HKG.
“If you want to protect yourself, you must first convert most of the assets … in order to maintain value in US dollars or other reliable foreign currency,” the post read.
Bitcoin Trading Up
Chinese banks are likely to push their ATMs out of order to circumvent the protestors’ withdrawal requests. The state could also seize the cash upon arresting its holder on a typical suspicion of causing riots. That has left Hong Kong protestors with a few options to safeguard their money from the police, which is bitcoin.
A portion of money already out of the banking system has landed itself in the emerging cryptocurrency markets, according to LocalBitcoins.com. The peer-to-peer crypto marketplace noted a spike in trading volume coming from the Hong Kong region. Within a few weeks, the volume surged from HK$3 million to HK$6 million. That sparked rumors that Hong Kong wealthies were tunneling their capital offshore by using Bitcoin’s decentralized asset-transfer infrastructure.
nice spike in notional HK LBC vol
wonder why that is … pic.twitter.com/mOM9NHBDYQ
— Josh Olszewicz (@CarpeNoctom) June 16, 2019
The bitcoin trend is hoping to leak down to everyday citizens as they participate in the bank run. Nevertheless, there is no evidence that could prove that they would.