China can control Bitcoins, but Tether controls China

Although neither China nor Tether controls Bitcoins or each other in the literal sense, there is certainly a much deeper connection between them.

China is in the news often. Whether it’s Bitcoins, a trade war, or a pandemic, a closer look usually reveals that there’s a lot more going on under the skin, especially when it comes to all things related to cryptocurrencies. In addition to trading in altcoins or trading in general, transactions with stablecoins are also highly concentrated in China.

Tether and various faces of China

$ 80 billion is the 24-hour volume of all cryptocurrencies, but most come from the Eastern Hemisphere. Yes, China and other East Asian countries have contributed a staggering 31% of all crypto-trading in the last 12 months. And if that’s not enough, 33% of all stablecoin transactions come from East Asia.

Recently, this volume has been increasing and, according to Chainalysis, Tether is at the center of events. Not only did the share of the popular stablecoin increase, but it defeated the Bitcoins as the most accepted cryptocurrency in June 2020, according to East Asian addresses.

In the last 12 months, Tether’s share of East Asian markets has increased by 93%, while stablecoin HUSD has reached 2.7%. It just shows how much Tether is used in China.

Why is that so?

The first and simplest answer is Bitcoin mining – since most Bitcoin mining (65% of hashrate) comes from China and the most popular trading pair is BTC / USDT, it is natural for miners to exchange their new Bitcoins for USDT.

Because Tether is popular in China and is most commonly used for day-to-day transactions, whether trading or moving capital from China, selling BTC for USDT makes sense because miners have to pay their operating expenses.

China allows about $ 50,000 to be moved out of the country each year. Therefore, this has led people to move to ways of overcoming this limitation, and Tether seems to be the most suitable for them.

This brings us to another reason, which is a transfer of capital – the total value sent from East Asia was around $ 50 billion. Chainalysis stated:

“Historically, wealthy citizens have gotten around this through foreign investments in real estate and other assets — sometimes even using shell companies to carry out investments — but the government has cracked down on some of these methods. Cryptocurrency could be picking up some of the slack though.”

In particular, the two incidents stand out and can provide an explanation. The first was on October 25, 2019, when Xi Jinping announced the CBDC, the second on March 17, 2020, when the crash was followed by signs of resuscitation.

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