China Secretly Selling Bitcoin? Analyst Warns Bitcoin Price Crash to $40K

China is the second-largest holder of Bitcoin in the world—right after the United States—with a reserve of around 194,000 BTC tokens. But here’s the twist: while the U.S. has been open about its crypto strategy, China has stayed largely silent.

What’s happening behind the scenes?
Is China quietly selling off its massive Bitcoin stash without telling the world?

A well-known crypto analyst thinks so – and if he’s right, it could shake up the entire market.

No Clear Crypto Policy – But a Massive Bitcoin Stash

Even though China is a global economic powerhouse, it hasn’t yet introduced a clear policy for cryptocurrencies. In fact, trading crypto is still illegal on the Chinese mainland.

Still, the country holds a massive Bitcoin reserve worth about $416 billion. Most of these tokens were seized by Chinese authorities in connection with scams, money laundering, and illegal gambling. In comparison, the U.S. holds around 207,189 BTC, valued at more than $17.5 billion.

What Happens to Seized Crypto? No One Really Knows

One big issue is that China hasn’t set clear rules on what to do with confiscated Bitcoin. This legal grey area has opened the door to speculation—and possibly even misuse.

Leviathan claims that some local governments are using this unclear legal status to quietly sell Bitcoin overseas. By doing this, they’re allegedly raising funds without drawing attention.

Tech Companies Helping With Secret Sales?

According to Leviathan, private tech firms like Jiafenxiang are helping local governments carry out these secret transactions. These companies are reportedly converting Bitcoin into Chinese yuan on behalf of the authorities.

Crypto Crimes in China on the Rise

Reports indicate that the total number of crypto-related crimes in China has been consistently rising over the last few years. In 2023 alone, the country witnessed as many as 3,000 money laundering cases. In the same year, at least $59 billion was seized in crypto-related crimes. 

A Growing Call for Clear Rules

Many experts now believe it’s time for China to create a clear legal framework to deal with seized digital assets. Some judges and legal professionals are calling for crypto to be recognized as legal property. If that happens, it would make managing confiscated assets much more straightforward.

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Leviathan adds that some experts suggest moving these seized crypto assets to Hong Kong, which has more structured crypto laws. Since Hong Kong operates separately from mainland China, this could help create a more transparent and regulated approach.

Will China Catch Up to the U.S.?

The recent election of pro-crypto U.S. President Donald Trump has led to a shift in American crypto policy. Since taking office, Trump has introduced several crypto-friendly initiatives, including an executive order to create a national Crypto Reserve.

If the U.S. continues pushing forward with its crypto strategy, China may be forced to rethink its own approach to digital assets – or risk falling behind.

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