Is Bitcoin's value higher in countries with strict capital controls?

The answer to this question, simply put: Yes, both in theory and often in practice, this is the case.

Let me explain why in plain language.

Imagine capital controls as a "wealth fence" a country puts around itself. For people living within this fence, it becomes very difficult to convert their local currency (e.g., RMB) into foreign currency (e.g., USD) and transfer it abroad. The government sets up various obstacles, such as quota limits, complex approval processes, and so on.

This is where Bitcoin's two key characteristics stand out:

1. Borderless: It doesn't belong to any country or bank. You can send it to anyone, anywhere on Earth with an internet connection, without needing approval from any bank.
2. Easy to exchange: In most parts of the world, you can easily sell Bitcoin and convert it into local fiat currency.

Now, imagine you're someone inside this "wealth fence." You have 1 million in assets, but you're worried about your local currency depreciating, or you want to invest abroad. However, the government only allows you to transfer $50,000 out per year. What do you do?

Many people then turn to Bitcoin as a "secret passage."

The typical process is as follows: Domestically, you find a way to buy Bitcoin with your money (RMB). During this process, you might have to pay a higher price than the international market rate. This is because many people domestically want to use this method to transfer assets, while relatively few are willing to sell Bitcoin. High demand and low supply naturally drive up the price. This extra amount is called a "premium."

Then, you transfer this Bitcoin via the internet to a wallet abroad (this process faces almost no obstacles).

Finally, you sell this Bitcoin abroad and convert it into USD.

You see, throughout this entire process, Bitcoin acts as a "transfer station" or a "ferry." It helps you move your assets from inside the "fence" to outside the "fence."

So, back to your question: Why is Bitcoin valued higher in these countries?

The core reason is: it provides a "service function" that bypasses capital controls.

People are willing to pay an extra fee for this "service," and this fee is reflected in Bitcoin's local price. It's like wanting to buy a ticket for a popular concert. The official price is 500, but you can't get one, so you have to buy it from a scalper for 800. The extra 300 is what you pay for the "service" of getting the ticket.

In countries with strict capital controls, the local price of Bitcoin = international standard price + "service fee" for bypassing controls (i.e., the premium).

Therefore, when a country's economy is unstable and capital controls tighten, you'll often see the local Bitcoin premium skyrocket, as it becomes a lifeline for many seeking to hedge or transfer assets.