Arthur Hayes, the previous CEO of crypto derivatives large BitMEX, believes the subsequent crypto bull run will begin when China strikes again into the market, and Hong Kong has an important half to play on this course of. 

In his Oct. 26 weblog post titled “Comeback”, Hayes outlined why he thinks the Hong Kong authorities’s announcement about introducing a bill to regulate crypto is an indication China is making an attempt to ease its manner again into the market. This might be as a result of Hong Kong acts as “the proxy by way of which China interacts with the world.”

“When China loves crypto, the bull market will come again. Will probably be a gradual course of, however the pink shoots are budding.”

Hayes argued that Hong Kong could turn into the testing floor for Beijing to experiment with crypto markets and act as a hub for Chinese language capital to search out its manner into the worldwide crypto markets.

“If these flows truly materialize in the best way I think about, they are going to be a robust supporting pillar of the subsequent bull market.”

In accordance with Hayes, Hong Kong’s “reorientation as a pro-crypto location” is a prong in Beijing’s technique to scale back its place in a manner that will not destabilize its inner monetary system.

Hong Kong was ranked the best-prepared nation for widespread crypto adoption in a research by Foreign exchange Counsel revealed in July 2022. It thought-about a number of components like crypto ATM installations, pro-crypto laws, and startup tradition.

China has one of many largest economies on this planet however has been principally hostile towards the crypto business. The nation’s first ban got here manner again in 2013 when it prohibited banks from dealing with Bitcoin (BTC) transactions.

Beijing ramped up its crypto crackdown efforts in 2021 when it carried out a number of regulatory operations to eradicate Bitcoin mining from the nation and deemed all crypto transactions unlawful.

Nevertheless, Hayes says “China has not left crypto — it has simply been dormant.”

Associated: Possession of Bitcoin still legal in China despite the ban, lawyer says

China did resume BTC mining operations in September 2022 and Chainalysis noted in its 2022 World Crypto Adoption Index that China re-entered the highest ten this yr after inserting thirteenth in 2021.

The authors of the World Crypto Adoption Index stated they discovered the event “particularly attention-grabbing” given the Chinese language authorities’s crackdown on crypto, however in keeping with their knowledge, “the ban has both been ineffective or loosely enforced.”