A unique trend in the cryptocurrency sector has emerged, catching the attention of numerous analysts and important players. According to Kaiko, a significant gap has formed between Bitcoin’s (BTC) connection with US equity markets (S&P 500) and that of Chinese equities (CSI 300).
In 2023, the correlation between BTC and Chinese stocks (CSI 300) will be significantly stronger. This contrasted sharply with the king coin’s declining association with US equities. The March banking crisis in the United States prompted investors to engage in the cryptocurrency industry. This contributed significantly to the decoupling of Bitcoin from traditional finance.
While the regulatory environment in the United States has gotten difficult for crypto market participants, a new light of hope emerged from China.
The aforementioned development could be ascribed to recent signs that China is reopening its market to the digital assets industry.
On May 27, the Beijing Municipal Science and Technology Commission released a white paper at the Zhongguancun Forum in an effort to position the Chinese capital as a key global innovation center for the digital economy. In addition, the commission intends to set aside $14 million to accomplish this goal.
The latest attempt to nurture its Web3 industry marks a significant break from previous crackdowns. Remember that China banned Bitcoin trade and mining in September 2021.
From 2009 to 2018, China was one of the first countries to adopt crypto assets, ushering in an era of increased awareness and trading. China was once the world’s BTC trade and mining capital. However, with the universal prohibition, it forfeited its position in the United States.
However, given China’s current move, things may change in its favor. Furthermore, crypto czars have granted the white paper their approval. Binance CEO CZ described the timing of the release as “interesting,” as Hong Kong’s new cryptocurrency regulations are due to take effect on June 1.
CZ’s remark was shared by Tron creator Justin Sun, who called the government’s emphasis on Web3 “fascinating.”
Interestingly, China re-entered the top ten of Chainalysis’ Global Crypto Adoption Index study for 2022 after falling to 13th place in the report for 2021. This accomplishment occurred despite China’s crypto ban, indicating that the ban was ineffective. According to the article, it could also indicate that the prohibition was not strictly implemented.
With China’s increasing emphasis on the digital economy and the government’s backing for Web3 innovation, the country’s cryptocurrency sector is set to rebound. The movement in Bitcoin’s correlation from the United States to China indicates a probable upheaval in the global crypto landscape. Investors and enthusiasts are keeping a careful eye on developments as China reclaims its position in the crypto world, keen to see the consequences of this move.