The bear market for the cryptocurrency asset class has dragged on for months now. Despite the welcome news of George Soros and Venrock preparing to enter the crypto markets, Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), and other major prices have generally continued in a consolidation phase, range-bound under the 200-day exponential moving average and strong resistance. On April 9, a possible bright spot emerged when China announced an unprecedented blockchain investment fund. In the context of China's intermittent threats of regulation and prohibition of crypto in the past, the news might signal a potential shift in the government's attitude toward virtual currency.

A report from the Chinse news outlet Sohu states that Xiong An Global Blockchain Innovation Fund is worth 10 billion yuan, or $1.6 billion. The fund was launched in partnership with Hangzhou-based investment company Tunlan Investment, the Yuhang District Government, the Future Science and Technology City Administrative committee, and the Hangzhou Yanqi Investment Management Co. The Hangzhou municipal government has pledged to back and guide 30% of the fund. Xu Xiaoping, a renowned Chinese angel investor who invested in Stream and Lino, has been named the fund's advisor. Li Xiaolai, a well-known blockchain enthusiast and investor, has been named a fund manager. The fund initially invested in ten projects and aims to invest in more promising blockchain projects and startups.

Additionally, the announcement also contained plans to build a park and research institute. The Hangzhou Blockchain Industrial Park and the Zhejiang Shimang Blockchain Strategic Development Research Institute have been established. The industrial park will serve as a coworking and incubation center for Chinese blockchain and fintech startups, and the research institute will focus on academic and intellectual blockchain technology-related endeavors. Hangzhou, a large, fast-growing Chinese provincial capital heavily involved in technological innovation, was a sensible choice city to host the park and research institute.

China, famous for its authoritarian capital controls and opaque government operations, is perhaps undergoing the beginning of a change of heart in regard to cryptocurrency and blockchain. China banned initial coin offerings (ICOs) last autumn, domestic exchanges and similar services in January, and foreign exchanges in February, and the central government has been historically hostile to technology that allows its citizens to evade the capital controls. But recently, Chinese state-owned companies have been researching and exploring the use of blockchain technology to create an "Internet of Things" system for commodities. That and the creation of the blockchain investment fund suggest that though crypto and blockchain are not necessarily dead in China, their survival and prosperity depend on legal and financial support from the Chinese state. Investors around the world would be wise to watch the actions of the new investment fund to help gauge Chinese sentiment.

The author owns a small amount of BTC.