Bitcoins on a Chinese flag

“My working thesis atm (at the moment) is that the next bull run is going to start in the East,” Gemini co-founder Cameron Winklevoss proclaimed on Twitter this weekend. “It will be a humbling reminder that crypto is a global asset class and that the West, really the US, always only ever had two options: embrace it or be left behind,” he added, before proclaiming that crypto “can’t be stopped”.

His comments come as a new crypto narrative emerges – that flows from China and other countries in Asia are going to be a major bullish driver for crypto. Indeed, analysts have been pointing to a significant rise in Chinese liquidity injections into their financial market system since the start of the year that has gone hand in hand with this year’s crypto pump.

“The Chinese easing narrative is not some imaginary garbage,” pseudonymous crypto-focused Twitter account @NoodleofBinance said over the weekend, posting a chart showing the steep rise in reverse repurchase liquidity injections conducted by China’s central bank. The most recent injection was a massive CNY 835 billion.

It seems that sudden monetary easing from the central bank of the world’s second-largest economy, likely aimed at helping pump the Chinese economy as it recovers from two and a half years of stop-start lockdowns, is helping to shield crypto prices from recent headwinds coming out of the US.

US regulatory authorities have amped up their “regulation by enforcement” drive this year, going after a number of major centralized US-based crypto firms like Kraken, Coinbase and Paxos. This has coincided with a string of much stronger-than-expected US data releases that has forced markets to price in additional rate hikes from the US Federal Reserve this year.

Chinese Liquidity Could Just Be the Start

Monetary easing from China is all well and good, but wasn’t crypto was banned in China back in 2021? Shouldn’t that kill any positive China crypto narrative?

Not necessarily, think many analysts. Yes, crypto is banned in China. But its not banned in Hong Kong. And Hong Kong appears to be taking steps to become a major global crypto hub. Earlier this year, Hong Kong’s financial secretary revealed at a tech summit that lawmakers in the country recently passed legislation to create a new virtual asset service provider licensing system.

Some analysts have speculated that China, which is essentially in control over what goes on in Hong Kong, might be using the country as a testing ground of sorts. The thinking goes that Hong Kong could act as a gateway for Chinese capital to access global crypto markets.

So, while Chinese liquidity injections pump crypto via the channel of easier global financial conditions, regulatory easing in Hong Kong could pump crypto via providing with a new funnel of capital inflows.

As the US cracks down on crypto, its power to influence price action in global crypto markets might begin to fade. Coinbase CEO Brian Armstrong recently warned that recent regulatory enforcement actions could drive crypto firms away from the US. “Any government that doesn’t offer clear rules and sincere guidance will be left in the dust,” proclaimed Cameron Winklevoss.

“This will mean missing out on the greatest period of growth since the rise of the commercial internet,” he added.

Bitcoin and the Chinese flag side by side

What Are The Best Coins to Buy?

So, if flows from China and the East are going to drive the next crypto bull market, what cryptocurrencies might be the best to buy?

Some have speculated that there could be a massive surge in the price of utility tokens of Asia-based cryptocurrency exchanges, like Huobi, KuCoin and Bitget. Popular crypto influencer Andrew Kang, who goes by the Twitter handle of @Rewkang, tweeted that he thinks that the “China Coin Narrative” will pump the likes of Filecoin (FIL), Polkadot (DOT), Vechain (VET), EOS (EOS), Internet Computer (ICP), Klaytn (KLAY), Binance Coin (BNB) and Ether (ETH).

He explained that Klaytn is actually a Korea-based coin, “but it might get confused” and that people might pump BNB out of mistakenly thinking that Binance CEO Changpeng Zhao (often referred to as CZ) is Chinese (he is actually Canadian). Vitalik Buterin, the co-founder of the Ethereum blockchain, has had multiple Chinese girlfriends, Kang added.

Others analysts have predicted that Tron’s TRX token could pump, given its founder Justin Sun is Chinese. But the general feeling is that an Asia-fuelled crypto pump would probably benefit most cryptocurrencies, including the likes of Bitcoin.

Andrew Kang theorized in a separate tweet that the China Coin Narrative has “flipped US regulatory FUD on its head”. “The more actions (the) US takes against crypto, the more the (US regulatory FUD) narrative is reinforced…” and the more “shorts enter the market that needs to buy back higher”. Essentially, he is arguing that US regulatory FUD should continue to fuel a crypto market short-squeeze.

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