China’s latest President, Xi Jinping, has secured his third term as the head of China. Many felt that his third term may herald even greater uncertainty as Xi presses for China to be a leader in the world order.
This spells of increased risk in the global macro environments, risk in every categories from economic to peace and stability.
As Maslow’s theory of needs illustrates, an individual will strive to preserve his or her resources especially in these uncertain times. Russia’s invasion of Ukraine has opened a glimpse into how the world might react should China invades Taiwan. Financial system like SWIFT may just block the RMB (China’s currency) making international monetary flows almost impossible. This may further weaken the RMB if it happens.
So, what is the alternative? Decentralised cryptocurrencies. Anyone that has fear of such a scenario playing out will naturally aim to protect his wealth. One of the most sure-footed way is to diversify RMB into cryptos like Bitcoin or Ethereum.
Coincidentally, the price of Bitcoin started to recover soon after President Xi was elected. We suspect the recovery has just begun and a de-correlation of Bitcoin and the equity market will soon accelerate.
After all, if the last crypto bull run was fuelled by loose monetary policy (read free money), wouldn’t the next bull run be driven by something more powerful – self preservation?
Another food for thought – Hong Kong will be opening up crypto trading to the retail. A major policy change. A harbinger of things to come?
