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The downturn in the cryptocurrency market is attributed to the actions of the People’s Bank of China, which is aggressively increasing its gold reserves, according to Chris Tipper, an analyst at the Australian crypto investment firm Ainslie Wealth. He believes that China currently plays a pivotal role in shaping global monetary flows.
The analyst noted that the People’s Bank of China injected approximately the same amount of funds into the global economy last year as it did in 2023. He anticipates that by 2026, the total inflows from China will reach $1 trillion. Due to the ban on investments in Bitcoin and other cryptocurrencies in China, this capital is being directed away from digital assets and into gold. Consequently, the prices of the precious metal are rising, prompting investors to focus on this asset instead.
“This situation creates a challenging environment for capital allocation: cryptocurrencies find themselves at a disadvantage compared to gold, as they are increasingly overlooked as an investment choice,” the analyst explained.
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Tipper supports his assertion with an example: when the flow of global liquidity was managed by the United States, Bitcoin experienced growth. The peak occurred in October when the first cryptocurrency reached a high of $126,000. Conversely, as China ramped up its gold purchases, the price of the metal began to rise. Thus, the recent decline in Bitcoin is not due to a disconnection from global liquidity but rather a reallocation of funds to other investment vehicles, the Ainslie Wealth expert clarified.
According to the analyst’s forecast, Bitcoin is expected to begin recovering when the liquidity share from Western countries increases. BTC may rise due to factors such as changes in the policy of the U.S. Federal Reserve and a weakening dollar, Tipper believes.
Previously, analysts from the London Crypto Club, a group of British traders and investors, suggested that military operations by Israel and the U.S. against Iran could elevate the price of Bitcoin and the overall market capitalization of cryptocurrencies.
