The idea of China buying Bitcoin or building Bitcoin reserves raises significant economic and geopolitical questions. Here's a breakdown:

China's Role in Cryptocurrency:

1. Trading Volume: China’s dominance in crypto trading, despite domestic restrictions, shows its influence in the market.

2. CBDC: China leads in Central Bank Digital Currency development, making it unlikely to actively promote Bitcoin alongside the digital yuan.

Why Would China Buy Bitcoin?

1. Reserve Diversification: Bitcoin could hedge against dollar hegemony and provide an inflation-resistant asset.

2. Strategic Positioning: Holding Bitcoin could enhance China's global influence and financial independence.

3. Global Influence: Large Bitcoin reserves could destabilize markets and challenge U.S. financial power.

Challenges:

1. Regulatory Conflict: Bitcoin’s decentralized nature conflicts with China’s tightly controlled financial system.

2. U.S. Oversight: Large Chinese Bitcoin purchases could provoke U.S. economic countermeasures.

3. Volatility: Bitcoin's price swings make it risky compared to traditional reserve assets.

The 'Bitcoin G7' Concept:

This concept, akin to the failed Libra proposal, suggests Bitcoin replacing the dollar as the global reserve currency. However, challenges include:

1. Coordination: Aligning global powers to adopt Bitcoin is difficult due to its decentralized nature.

2. Central Bank Resistance: Central banks may resist relinquishing control over monetary policy.

3. Scalability: Bitcoin’s energy consumption and scalability issues hinder its global adoption.

Feasibility and Implications:

While intriguing, the idea faces significant challenges and seems improbable in the near term. If countries like China stockpiled Bitcoin, it could boost its value but also provoke regulatory crackdowns.

In summary, while the idea of a 'Bitcoin G7' or China building Bitcoin reserves is speculative, it is worth monitoring as cryptocurrency continues to reshape global finance.

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