As Bitcoin (BTC) attempts to stabilize above the crucial $80,000 support level, a new warning from market analyst Leviathan has raised concerns about an alleged strategy by China that could significantly impact the leading cryptocurrency.\u00a0<\/p>\n
In a recent post <\/a>on X (formerly Twitter), Leviathan claimed that China plans to sell off its Bitcoin holdings, potentially driving the price down to $40,000. According to the analyst, this move is just the beginning of a broader scheme.<\/p>\n Despite the Chinese government\u2019s public stance against cryptocurrency trading, local authorities have found a workaround, he alleges. The expert asserts that they have been quietly cashing in on confiscated Bitcoin, which has led to an \u201cunderground fiscal strategy\u201d that operates in \u201clegal ambiguity.\u201d<\/p>\n Currently, Chinese authorities are reported to hold approximately 194,000 BTC, making them the second-largest government holder<\/a> of Bitcoin, just behind the United States.\u00a0<\/p>\n Leviathan highlights that while the Chinese government publicly denounces cryptocurrency, it simultaneously benefits financially from its underground sales.\u00a0<\/p>\n Local governments are reportedly improvising their strategies, with some engaging private tech firms to liquidate the confiscated Bitcoin on offshore exchanges. Others, allegedly maintain a more \u201cclandestine approach.\u201d\u00a0<\/p>\n The expert provides an example of a relatively unknown company in Shenzhen, Jiafenxiang, that has allegedly facilitated over $400 million in crypto sales<\/a> on behalf of various city governments, converting the proceeds into yuan and transferring the funds back to local finance departments.<\/p>\n In 2023, China witnessed a record surge in crypto-related crimes, with over $59 billion tied to illegal activities and more than 3,000 money laundering cases prosecuted.\u00a0<\/p>\n Amidst this backdrop, local governments are increasingly reliant on the revenue generated from fines and confiscations<\/a> \u2014 a significant portion of which comes from liquidated cryptocurrencies.\u00a0<\/p>\n However, the need for funds is at odds with the government\u2019s public anti-crypto stance, forcing officials to offload coins abroad through intermediaries while hoping for minimal interference from Beijing.<\/p>\n There have been discussions among judges, lawyers, and police about the need for a consistent national policy regarding seized cryptocurrencies<\/a>. Some have proposed that the central bank take control over these assets, while others have suggested establishing a sovereign crypto fund.\u00a0<\/p>\n Leviathan has pointed to Hong Kong, which, with its more favorable legal framework for cryptocurrencies, has emerged as a potential destination for China\u2019s Bitcoin stockpile.<\/p>\n This situation presents a unique challenge for China, as the contradiction between its public denouncement of cryptocurrencies and its private profit from them becomes increasingly apparent.\u00a0<\/p>\nHong Kong Emerges As Potential Haven For China\u2019s Confiscated BTC<\/h2>\n