(0) I lean towards believing we had a paradigm shift for $BTC demand given news from China. Similar to how halving step-function reduces demand, CCP officially making blockchain a strategic pillar = step-function in demand creation that permeates into ecosystem in next 1-2 years.
(1) What’s obvious is that the CCP clearly has the goal of toppling USD’s reserve currency status and broadening RMB’s usage especially in OBOR regions. Blockchain seems to be the good vehicle to reduce friction of value transfer while increasing control.
(2) Similar to Libra, a digital RMB when appropriately plugged via B2B and retail touchpoints is extremely powerful as a means to create US/China currency as a reserve float, while latently encouraging local citizens to choose between a softer vs. harder fiat.
(3) If we subscribe to the believe that US is the UK in the 20th century, China is the US in the 21st century, and SE Asia + Africa is China’s China in this paradigm, then you realize it’s really the USD + Swift system all over again, this time with RMB and DCEP.
(4) The intricacy is obviously that the US has a lot to lose here – thus the hesitancy in putting Libra through, USD is already a reserve globally and marginally bumps won’t help much. For China, it’s kind of a situation where your enemy’s enemy is your friend…
(5) … risk exists in FX reserves & the peg, but this is a rare chance to eclipse the incumbent when the outcome is slightly uncertain while ROIC is very long-dated, much similar to that of infrastructure build, 5G, AI, Semiconductors, renewable energy, bioscience, etc.
(6) So how is it good for $BTC in terms of demand? First one has to realize that in China, the policies follow the premiere’s tone and permeates down. Xi sets the tone, subsidies and policies follow, and ultimately gets carried out in detail in local regions.
(7) This likely won’t be a one-day event (aside from of course front-runners and speculative flow initially), but will be a consistent bombardment and marketing re: blockchain into all walks of life over the next 1-2 years.
(8) …what the west will see is all of a sudden every company will talk about being blockchain enabled, blockchain being on CCTV every other day, colleges opening courses, and K-12 materials being rewritten to include the very basics of blockchain.
(9) The second thing is crypto / blockchain will no longer be called a fraud in public press – once Xi has spoken, it will be political suicide for any scholars or government officials otherwise. This is a tremendous 180-turn in public image.
(10) The 3rd thing is so now you have rapid awareness and decreased stigma, it will be impossible for those to ignore $BTC when studying blockchain. For any startups / subsidy receivers in the industry, it would be impossible for them to not consider putting some into $BTC.
(11) So to conclude, the speed to adoption (awareness + skepticism phase) had been accelerated and one can clearly observe funding nationally flowing into the field. This is a rather significant demand event that not many saw coming and likely would likely prompt a US response.
(12) This isn’t necessarily bullish some “China chains” like NEO, TRX, ONT, etc tho. They could still pump but more likely than not the scams will be eradicated. As the joke in China goes, when the people’s army sets base in a mountain, they first clean out the robbers.
(13) Doesn't mean $BTC can't go lower in the interim (chart says chop for a while), but this event is something to be extra mindful of as it actually drives both narrative and fundamentals (i.e. demand), similar to the halving being a supply event.
I meant halving step-function reduces SUPPLY! duh silly me, got too excited typing it all out.
