The price of bitcoin continues to rise, led primarily by the exchanges in China, which have, oftentimes, been trading at a premium of $10/BTC higher than the other major exchanges around the world. With China driving such an increase in the bitcoin price, many have been speculating that it could be driven by capital controls.
In China, the law stipulates that individuals cannot send more than the equivalent of $50,000 out of the country in a year. To get around this, individuals have hired smugglers to get cash out of the country, bought extremely expensive real estate in cities like New York and London, and even set up businesses in other countries with the goal of overpaying for inventory from China. All of this just to get money out of the country.
According to pseudonymous blogger Tyler Durden of Zero Hedge , the primary driver has been the Chinese purchasing bitcoin as a way of getting around capital controls.
“If a few hundred million Chinese decide that the time has come to use bitcoin as the capital controls bypassing currency of choice … sit back and watch as we witness the second coming of the bitcoin bubble,”