Experts have been talking in recent months about how Bitcoin benefits from both market and political turmoil.
Now, some news media are reporting that Bitcoin trades higher specifically in Hong Kong, where concerns about leadership kowtowing to China has had activists in the streets.
“Bitcoin has begun trading at a premium in Hong Kong as continued political uncertainty produces a widely-reported spike in demand,” writes William Suberg today at Cointelegraph in a piece titled Hong Kong is paying higher prices for Bitcoin amid political unrest. “Data from P2P Bitcoin exchange LocalBitcoins showed traders paying around $300 more per coin than elsewhere on Aug. 14, which translates into a premium of around 2%.”
This value premium that analysts are seeing in the tense standoff between Hong Kong citizens and their government is different than, say, the colloquially named “kimchi premium” that people talk about in South Korea, where Bitcoin value goes up simply based on demand.
Here, there is the idea that the instability of fiat currency based on various factors propels Bitcoin skyward.
“(The Hong Kong scenario and others) underscore an increasing tendency to treat Bitcoin as a safe haven asset in times of fiat unpredictability,” Suberg writes.
Like Suberg, others also mention Argentina as another place where tensions have spiked Bitcoin value.
“In Argentina, where the peso plunged on election uncertainty, Bitcoin was recently trading for as much as $12,000 on LocalBitcoins.com, a peer-to-peer platform, or 10% higher than on many international crypto exchanges,” writes Olga Kharif at Bloomberg. “The token was trading at about a 4% premium in Hong Kong, where continued anti-government protests are raising fears of retaliation.”
Some of the activist activity in Hong Kong has settled down over the week, but some suggest much longer term effects.
“Hong Kong is a victim,” writes a poster named ‘Mitsui’ commenting on Suberg’s story. “This unrest will probably remain for next decade or so.”
Keep an eye on Bitcoin pricing in these types of areas to understand why, amid a general Bitcoin bull rally, prices maybe even higher in specific investor communities.