Yuan and Bitcoin’s Price Devaluation
The world’s economy has complex connections that at first glance don’t seem to have a logical explanation, this is a process that the great economies such as China do not leave in a random way, stock markets react immediately when this world power announces a devaluation policy.
It was expected the crypto-currency price to be strengthened with the devaluation of the Yuan, but the results say that it won’t be so. Bitcoin industry observers, try to correlate the market movements and macroeconomic trends; so, China has become a benchmark for its excessive activity on the local stock exchanges. However, in this last week there has been a significant change in the Bitcoin price.
Indicators to make relevance
On June 27, the People’s Bank of China (PBC), reduced the parity of the Yuan to ¥ 6,6375, per dollar, representing a fall of 0.9%, Bloomberg reported, china’s currency had fallen ¥ 0.3 percent to 6,6473. The Yuan exchange rate was near to its lowest level since December 2010. Despite this the Bitcoin price barely moved, fluctuating mostly between $630 and $660 on June 27 and fall into a range even closer between $640 and $660 on June 28.
On June 24 the price of the Bitcoin had increased by 8.7%, when the Yuan had reached a minimum in relation to the dollar in five years and half, this was an event reported by the news agencies such as CNBC, who tried to find an explanation in relation to the economy activity in China, however, there is no clarity for that indicators behavior in the stocks.
When Coindesk ask to experts in market, these had different interpretations in relation to the stability of bitcoin when the Yuan’s price fell, meanwhile Petar Zivkoyski, Whaleclub platform operations Director for Bitcoin trade considered that the idea that it is the devaluation of the Yuan, and the price of the cryptocurrency is “above all a myth” his company does not see “any evidence” that this phenomenon occurs. Zivkovski said, “Bitcoin is a purely speculative asset”.
Another expert, Arthur Hayes, BitMex co-founder and CEO, argues that although the actions taken by China increasing expectations, this happens with international trade and not with local buyers, he added that “Chinese are not buying bitcoin in mass to escape from the capital controls”. Beyond that, both Zivkovksi and Hayes spoke about the temporary volatility, with an emphasis on how prices have fluctuated before falling rapidly again and return to normal.
Also, Zivkovski said, “This weeks events, provide evidence that the situation in China may not be strong enough to encourage further increases. “The last three times that China devalued its currency, including a couple of days ago, the bitcoin price increased temporarily, but it quickly faded, taking the market average and returning to prices and previous levels”. He added, “this indicates that the devaluation of the Yuan news, is not powerful enough to reverse a trend and sustain a new”.
Disclaimer: This press release is for informational purposes information does not constitute an investment advice or an offer to invest. The views expressed in this article are those of the author and do not necessarily represent infocoin views, and should not be attributed to Infocoin.