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As Bitcoin continues to solidify its position as a digital store of value, the strategic moves of these two economic powerhouses are reshaping the crypto market. This articleexplores how the US and China’s approaches to Bitcoin are influencing market dynamics, investor sentiment, and the broader adoption of cryptocurrencies.
Pro Crypto Pivot Under New Leadership in 2025
The United States has emerged as a frontrunner in the crypto race, particularly following a shift toward pro-crypto policies under recent political leadership. With initiatives like the proposed creation of a national Bitcoin reserve and the appointment of crypto-friendly regulators, the US is fostering an environment conducive to digital asset innovation. This pivot has bolstered investor confidence, driving Bitcoin’s price to new heights, with the cryptocurrency surpassing $100,000 in December 2024.
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American firms, such as MicroStrategy and major Bitcoin ETF issuers, are playing a pivotal role in integrating cryptocurrencies into mainstream finance. The US holds approximately 2 million BTC across public companies, ETFs, and government-controlled wallets, giving it significant leverage over market supply dynamics. Transparent auctions of seized Bitcoin, such as those from the Silk Road case, further enhance market trust by ensuring clear regulatory frameworks.
The Financial Innovation and Technology for the 21st Century Act (FIT21) is another key development, aimed at clarifying crypto regulations and encouraging institutional adoption. This regulatory clarity contrasts sharply with the uncertainty that has historically plagued the crypto market, positioning the US as a hub for blockchain innovation. As a result, the US is attracting crypto startups and talent, filling the vacuum left by China’s restrictive policies.
China: A Complex Relationship with Bitcoin
China’s approach to Bitcoin is markedly different, shaped by its stringent regulatory stance. Since banning cryptocurrency trading and mining in 2021, China has sought to suppress private cryptocurrencies while promoting its state-controlled digital yuan. This crackdown was driven by concerns over financial stability, capital flight, and the potential threat of decentralized currencies to the renminbi.
Despite the ban, China remains a significant player in the Bitcoin ecosystem. On-chain data suggests that China liquidated 194,775 BTC seized from criminal activities, often through mixers and exchanges, indicating indirect influence over market liquidity. Additionally, Chinese investors continue to access Bitcoin through offshore platforms and over-the-counter (OTC) markets, with Hong Kong serving as a crypto-friendly hub under the “One Country, Two Systems” framework. Hong Kong’s licensed Bitcoin ETFs and Web3 initiatives provide a regulated pathway for Chinese capital to enter the crypto market, albeit under Beijing’s watchful eye.
Surprisingly, China still accounts for an estimated 20% of global Bitcoin mining hash rate, despite provincial bans. Local governments, facing declining tax revenues, are reportedly turning a blind eye to miners leveraging stranded power sources. This resilience underscores China’s complex relationship with Bitcoin—officially banned but unofficially persistent.
Market Impacts: Volatility, Liquidity, and Investor Sentiment
The contrasting strategies of the US and China are creating significant ripples in the crypto market. In the US, pro-crypto policies are driving institutional investment and stabilizing Bitcoin’s role as a hedge against inflation. The approval of spot Bitcoin ETFs has attracted billions in capital, enhancing liquidity and reducing volatility compared to previous cycles.
Conversely, China’s actions have historically introduced uncertainty. The 2021 mining ban led to a temporary drop in Bitcoin’s price and a migration of miners to countries like Kazakhstan and the US. Recent tariff wars, with the US imposing 104% tariffs on Chinese goods and China retaliating with 245% tariffs, have further pressured risk-sensitive markets, including cryptocurrencies. Bitcoin experienced a 21% plunge in April 2025, reflecting the market’s sensitivity to geopolitical tensions.
However, Bitcoin’s long-term outlook remains bullish. As fiat currencies face inflationary pressures from trade disputes, investors are increasingly viewing Bitcoin as a safe-haven asset, similar to gold. In China, economic downturns and declining returns on traditional assets like real estate are pushing investors toward Bitcoin and stablecoins as an “exit ramp” from the domestic financial system. OTC desks in China have reported record inflows since 2021, highlighting this growing demand.
Geopolitical Implications: A Digital Power Struggle
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Beyond market dynamics, the Bitcoin race reflects a broader geopolitical struggle. The US sees cryptocurrencies as a tool to maintain financial dominance, particularly as the dollar faces challenges from China’s digital yuan and global de-dollarization trends. By fostering private-sector innovation within a regulated framework, the US aims to lead in blockchain technology and digital payments.
China, meanwhile, views private cryptocurrencies as a threat to its economic sovereignty. Its digital yuan, now in advanced pilot stages, is designed to enhance state control over financial transactions while challenging the dollar’s global reserve status. However, by stifling private crypto innovation, China risks ceding ground to the US in the blockchain race. The question remains whether China will relax its stance to regain influence or continue prioritizing state-controlled digital assets.
The Future of the Crypto Market
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The Bitcoin race between the US and China is accelerating crypto adoption worldwide. In the US, regulatory clarity and institutional backing are mainstreaming cryptocurrencies, attracting both retail and institutional investors. In China, despite restrictions, investor demand and Hong Kong’s role as a crypto hub suggest that cryptocurrencies will remain relevant.
Globally, the competition is spurring innovation in decentralized finance (DeFi) and blockchain applications. As traditional financial systems face strain from tariffs and economic uncertainty, cryptocurrencies are gaining traction as alternatives to fiat currencies. However, challenges like Bitcoin’s energy consumption and regulatory uncertainties in other jurisdictions could temper this growth.
Conclusion
The race to dominate Bitcoinholdings between the US and China is more than a contest of accumulation—it’s a battle for influence over the future of finance. The US’s pro-crypto policies are fostering innovation and market stability, while China’s restrictive stance limits its direct influence but doesn’t eliminate its presence in the crypto ecosystem.
As both nations navigate this digital frontier, their actions will continue to shape crypto market dynamics, investor behavior, and the global adoption of cryptocurrencies. For investors, staying informed about these geopolitical shifts is crucial for navigating the volatile yet promising world of digital assets.
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