Chinese capital controls make way for bitcoin growth

Chinese markets are in deep trouble as huge amounts of investment money have been flowing out of the economy. The world's second largest economy has taken fresh measures to get the situation under control. Zerohedge says that massive capital controls may be on the horizon that is expected to create a great opportunity for Bitcoin to peak as it did in 2013.

CNN reports that over the past one year, over US$30 billion moved out of China to U.S. real estate, accounting for roughly 25% of all foreign investment in that sector. The outflow has taken place despite an annual limit of $50,000 on the amount of money an individual can move out of the country.

The Chinese are starting to "think money in the bank is not safe -- it won't gain any value if the renminbi is still devaluing," said David Ji of Knight Frank, an international real estate agency. "So people will look to real estate as a more solid investment channel."

The gold reserves have been increased by the government, but individual investor finds it less attractive as it leaves trail coming and going for those who wish to diversify and avoid the local currency's problems and monitoring.

This is where bitcoin comes into the picture. The digital currency's unique ability to move money around the world in seconds makes it natural fit for any financial market in need. With Bitcoin's overall market value at a mere US$3.3 billion, a fraction of that investment into U.S. real estate would easily double bitcoin values. A block of Chinese national investment would have a large effect on bitcoin values for speculators and investors.

It seems China's economy has a lot of money to move out and bitcoin makes this process faster and easier. The current economic situation appears to present the country with an opportune moment to jump back into Bitcoin, which could push price values higher over the next year.