New market analysis from China released on the 20th suggests that the Chinese government’s estimated Bitcoin (BTC) holdings are now just 4,012 BTC away from surpassing those of the United States, highlighting a potential turning point in global crypto power dynamics.

Despite banning crypto, China is only 4,012 $BTC away from flipping the USA as the government with the largest #Bitcoin holding. pic.twitter.com/3GOOtLbcdM

— Crypto Sharmin (@CryptoSharmin) January 27, 2026

The development comes as Chinese authorities renew pressure on domestic crypto activity. In Xinjiang alone, approximately 1.3 gigawatts of mining capacity were shut down, forcing an estimated 400,000 mining machines offline. As a result, Bitcoin’s global hash rate dropped roughly 8% within a week, underscoring China’s continued influence over worldwide mining infrastructure.

However, analysts believe this is more than a simple regulatory crackdown. Instead, China may be transitioning from Bitcoin production to direct asset accumulation, quietly increasing reserves while Asian markets show persistent selling pressure.

From Mining to Accumulation

Market observers note that despite visible enforcement actions, China could be strategically building Bitcoin positions behind the scenes. The apparent shift away from mining toward direct purchases suggests a longer-term approach to digital asset exposure.

This strategy may be supported by China’s record trade surplus. During the first 11 months of 2025, the country posted its first-ever surplus exceeding $1 trillion, providing ample foreign currency reserves that could be partially allocated to alternative assets such as Bitcoin.

At the same time, China appears to be accelerating its decoupling from U.S. markets. Rising geopolitical tensions and tariff risks are pushing policymakers to diversify reserve assets. A weaker yuan has also boosted export competitiveness while making Bitcoin accumulation more cost-efficient in local terms.

Bitcoin Pullback Creates Strategic Entry Window

Bitcoin is currently trading near $86,000, roughly 30% below its October 2025 peak. Analysts identify $82,800 as a critical technical support level, suggesting the recent correction may offer a favorable entry point for large-scale buyers.

While U.S. spot Bitcoin ETFs continue to attract inflows, Asian markets are experiencing net selling, creating a regional imbalance. This divergence potentially allows China to accumulate BTC at comparatively discounted prices versus Western institutional buyers.

If current trends persist, China could soon overtake the U.S. in government-held Bitcoin, reshaping the geopolitical landscape of cryptocurrencies.

For investors considering entering the market, understanding how to buy Bitcoin and managing risk carefully remains essential as volatility continues.