Chinese Investors Turn to Bitcoin Amid Stock Market Struggles

In Shanghai and Hong Kong, individuals disillusioned by the stock market's performance are increasingly turning to Bitcoin and other cryptocurrencies, despite China's prohibition on such activities since 2021. Dylan Run, a finance professional from Shanghai, shifted part of his investments to cryptocurrencies in early 2023 amid the declining performance of the Chinese economy and its stock markets. Utilizing bank cards from smaller rural banks, Run managed transactions under 50,000 yuan ($6,978) each to avoid detection, describing Bitcoin as a "haven" akin to gold. His cryptocurrency holdings now represent half of his investment portfolio, showing a 45% increase in value, in contrast to the continued downturn of China's stock market over three years.

The trend of moving investments into cryptocurrencies is gaining traction among Chinese investors seeking stability away from the faltering stock and real estate markets. Operating in a legal grey zone, individuals creatively access bitcoin and other digital assets through various channels, including crypto exchanges like OKX and Binance, and over-the-counter transactions. Some investors are also setting up bank accounts abroad to facilitate their purchases of cryptocurrencies.

Following the endorsement of digital assets by Hong Kong last year, Chinese citizens are leveraging their $50,000 annual foreign exchange quotas to invest in cryptocurrencies within the region. This move is seen as a way to diversify assets offshore amidst the domestic investment climate's increased risk and uncertainty. According to a senior executive from a Hong Kong-based cryptocurrency exchange, there's a noticeable influx of mainland investors into the cryptocurrency market, drawn by the promise of a more secure investment alternative.