Trump: USA and China in a race for Bitcoin

In a major interview with the Bloomberg news channel published on July 16, presidential candidate Donald Trump explained that his support for the Bitcoin and crypto sector is primarily due to the fact that he wants to gain an advantage over China. According to Trump, the People's Republic is "very interested" and "pretty advanced in this area".

Has the point now been reached where the world's largest economies are fighting over Bitcoin and is China actually taking part in this race in secret?

And could the USA under Trump actually buy Bitcoin strategically? In addition to speculation in the mainstream, there are also the first rumors in this regard. It is said that the presidential candidate will announce a plan to build up a state Bitcoin reserve at the Bitcoin conference in Nashville next week.

Donald Trump has already emphasized several times that his announced political openness towards Bitcoin and cryptocurrencies is also about gaining an advantage over competing countries. For example, in his post on Truth Social, in which he also expressed his desire for all future Bitcoin to be mined in the USA - Blocktrainer.de reported.

Biden's hatred of Bitcoin only helps China, Russia and the radical communist left. We want all remaining Bitcoin to be made in the USA!!!
_{Donald Trump}

A small but relevant addition was also the reference to "or other countries will have it" when he emphasized standing up for Bitcoin and crypto in his campaign speeches.

So it seemed as if the more totalitarian China had decided against Bitcoin and in favor of gold. But is this really the case? And does Donald Trump possibly have insider information in this regard that allows him to make these statements?

The People's Republic of China is not easy for outsiders to penetrate. The tenor in the Western media was that Beijing had banned Bitcoin mining and even trading in digital assets in 2021.

However, this was not quite so clear-cut. According to internal data available to the Wall Street Journal, the Chinese are still trading large volumes via the crypto exchange Binance.

Binance, the world's largest crypto exchange, was set to leave China behind when the country made cryptocurrency trading illegal in 2021. Almost two years later, users traded $90 billion worth of cryptocurrencies in a single month in China, according to internal figures seen by The Wall Street Journal and current and former employees. The transactions made China by far Binance's largest market, accounting for 20% of global volume, excluding trades by a subset of very large traders.
_{Wall Street Journal on August 2, 2023}

Around 20 percent of the Bitcoin hashrate is also said to still originate from the "Middle Kingdom" despite the supposed mining ban. According to reports, even government officials are said to be working with mining companies.

Meanwhile, there are rumors that the People's Republic could soon open up more to Bitcoin and the like. Justin Sun, a well-known crypto entrepreneur and founder of the cryptocurrency Tron, commented on this just a few days ago. Sun, who also owns the crypto exchange Poloniex, won a victory in court in mainland China. He was under investigation for insider trading.

"This is a big victory, not only for me, but also for the industry itself, as cryptocurrencies have long been considered a gray area in China," Sun told Forbes, adding that the court in China has given cryptocurrencies a certain legitimacy. He concluded that China is now ready to make a U-turn on Bitcoin and cryptocurrencies.

A few weeks ago, the Industrial and Commercial Bank of China (ICBC) also commented positively on Bitcoin in a report. In addition to the ongoing evolution of digital assets, the world's largest bank in terms of total assets also addressed the positive characteristics of Satoshi Nakamoto's creation.

Bitcoin maintains scarcity similar to gold through mathematical consensus, but at the same time solves the problem that it is difficult to share, hard to identify and inconvenient to carry.
_{From the ICBC report}

The development in the Chinese Special Administrative Region is also interesting. Hong Kong has even approved Bitcoin and Ethereum spot ETFs and is committed to becoming a "hub" for digital assets. Mainland Chinese cannot buy the ETFs for the time being, but Bloomberg analysts believe this could be the case in the not-so-distant future.

According to Bitcoin Treasuries, China itself currently holds around 190,000 Bitcoin, which the country has confiscated. This would be only slightly less than the more than 213,000 BTC held by the United States. However, it is unclear whether China has not already sold the Bitcoin - at least in part - in the meantime.

So far, it is probably highly opaque, even for mainland Chinese, what Beijing's current course is towards Bitcoin and Co. Even if slight attempts at rapprochement can be seen and neither mining nor trading in Bitcoin seems to be completely prohibited, the USA is probably still far ahead.

But if China really wanted to gain an advantage by betting on Bitcoin, wouldn't it be smarter to do so in secret and let the West believe that it is not interested?

If Trump's statements are true, then China's approach could be completely different to that of the USA. The Bitcoin and crypto sector currently feels primarily at home in the US. Many mining companies have also relocated their operations from China to the US, which means that around 40% of the Bitcoin hashrate currently comes from the United States.

Wall Street and major US banks and asset managers such as BlackRock are backing Bitcoin and even the first US state pension fund has invested in the asset via spot ETFs - Blocktrainer.de reported.

Meanwhile, more and more US politicians are currently advocating covering the US dollar with Bitcoin or building up a strategic Bitcoin reserve. Accordingly, speculation is growing that the US could soon take this major step.

With Bitcoin supporter Donald Trump seemingly set to be elected to the White House in November and even wanting to make a Bitcoin holder his vice president, this is no longer so unlikely. David Bailey, the CEO of Bitcoin Magazine and an advisor to the presidential candidate, even claimed in an audio discussion on 𝕏 that Trump had asked him whether Bitcoin could be used to solve the US national debt problem.

Rumors are also currently circulating that the 78-year-old will talk about this project during his appearance at the Bitcoin Conference in Nashville on Saturday next week. Dennis Porter, CEO of a non-profit organization in the Bitcoin mining sector in the US, wrote yesterday on 𝕏 that he has heard from trustworthy sources that Trump will announce the strategic Bitcoin reserve plan in Nashville. Simon Dixon, a former investment banker with a large 𝕏-account, reported that he is getting more and more information confirming this.

If this turns out to be true, it would be an incredible catalyst for the Bitcoin price. However, the market did not react positively to the rumors yesterday, suggesting that it is currently still being dismissed as highly unlikely.

At this point, the question also arises as to whether it would even be smart for Trump - if he intends to do so at all - to announce this without already being in office. Ultimately, this would only cause the price of Bitcoin to rise immensely, making it increasingly difficult for the US to secure a large share of the asset. It might be smarter to build up Bitcoin holdings in secret and only drop the bombshell when the Bitcoin position is already large enough.

It remains to be seen whether the USA will actually buy Bitcoin strategically under Trump and whether the presidential candidate will announce this step in advance. The coming months and years should also shed light on China's approach to Bitcoin and whether the People's Republic has actually been intensively interested in the topic for longer and has already made more progress than it currently appears.