- The proposed Hong Kong extradition bill has caused some residents to convert substantial amounts of fiat to Crypto
- People don’t want to risk losing their financial assets since the bill allows the Chinese government to be able to seize any financial asset
- Peer-to-peer platforms like ‘Local.Bitcoin’ has seen an increase in the number of Hong Kong based users
Bitcoin has always been an escape route open to everyone ever since people discovered what it was and the potential it holds. Its un-traceability and the fact that all your money could be kept safe in your pocket has made it increasingly popular among business men of all kinds. The number one cryptocurrency has come a long way. Being the most famous among all the other cryptocurrencies it is widely known among people who are looking for great profits and also those who use it for its purposes as a currency since the token has a made a huge impact on the modern society even the media as well. The price of Bitcoin broke the $9000 barrier a few days back. Recently, Mati Greenspan, eToro’s senior market analyst tweeted that bitcoin is trading at a premium of over $100. And the latest place to show a spike in interest – Hong Kong.
Hong Kong extradition bill causing deep concerns
The huge price surge of bitcoin can be directly linked to the Hong Kong extradition bill. The proposed law would allow mainland Chinese courts to order Hong Kong courts to freeze and confiscate any assets related to crimes committed on the mainland as reported by Reuters. The bill was drafted after a Hong Kong boyfriend murdered his girlfriend in Taiwan and since the states don’t have an extradition treaty, the guilty can’t be returned to Taiwan to face trial. Even though the case is really saddening people of Hong Kong are really worried about the proposed law due to poison pills included in the bill.
The protest has seen around 2 million local residents marching on the streets and this has rocked the Chinese territory. Protestors have demanded the resignation of Hong Kong chief executive, Carrie Lam, as well as the withdrawal of the law being proposed. Many Hong Kong tycoons are already migrating their wealth to Singapore. The fear of getting their assets confiscated has caused hordes of people moving their money.
Bitcoin has proved to be a popular escape route for wealth because it is very difficult for a government to confiscate it. It has been noticed from the start of the protests that the price of Bitcoin was moving up. Local cryptocurrency exchange saw the price skyrocket up to $160 higher than that of the global market. 1 bitcoin was trading for over 73,000 HKD which is equivalent to $9,337. Popular websites like ‘Local.Bitcoin.com’ and Paxful, have also seen an increase in buyers from Hong Kong. The price could move even higher because nobody wants to lose their money. Hong Kong is one of the wealthiest territories in the region in terms of private wealth. 853 individuals worth more than $100 million US dollars currently reside in the Hong Kong region.
Travis Kling, an ex-equities portfolio manager, and cryptocurrency influencer commented on the situation:
Hundreds of thousands of people protested in Hong Kong against a bill allowing extradition to mainland China.
Access to The Washington Post and The Guardian were just blocked in China. Access to Wikipedia was blocked a few weeks ago.
Crypto is intimately wrapped up in all this.
— Travis Kling (@Travis_Kling) June 10, 2019
Not the first time people turn towards crypto during political crisis
Venezuela has been struggling with hyperinflation since 2014 and its currency was almost valueless when its currency Bolivar hit 57.3 percent inflation rate. Millions of residents have fled the country as essential goods have become unaffordable. Many of the residents have turned towards bitcoin and other cryptocurrencies as their savior. Venezuelan military personnel at the border often seized the money of residents that tried to flee.
Circumstances led local residents to convert all their Bolivars to Bitcoin and later convert it back to fiat via the online crypto marketplace ‘Local Bitcoins’, a peer-to-peer platform. Storing the fiat in Cryptocurrencies is the safest method to keep their financial valuation from tumbling down since the country’s economy has failed.