The Chinese yuan is falling once again, and that is the key to the Bitcoin Bull case
Last year, one of the biggest narratives in the Bitcoin market was that tensions between China and the United States, culminating in a massive trade war, were driving cryptocurrencies.
Every time President Donald Trump tweeted about U.S. relations with China, BTC responded, both up and down with geopolitical trends. Once when Trump announced that tariffs would be applied to billions of Chinese products, both Bitcoin and the US dollar against the Chinese yuan jumped in tandem.
With the Chinese yuan starting to underperform, the narrative that geopolitical tensions are influencing Bitcoin’s price has begun to be mentioned once again.
Chinese yuan wobbles
Although the relations between EE. USA And China improved again in the last quarter of 2019, once again warming up the bad relations between the two world superpowers.
In response to record-breaking Hong Kong protests last year, the Chinese mainland government is trying to impose a strict Security Law on the region. The United States, which designates Hong Kong as a special economic zone due to its status as a more democratic Chinese city, has retaliated.
Trump said he and Washington would react “very forcefully” if the Act were passed, and that others in the government and around the world would react the same way.
The Chinese yuan as such has sunk, breaking resistance as prominent Bitcoin investor and crypto executive Matt D’Souza shown in the chart below.
In addition to pressure against the yuan, the United States has begun to increase its pressure against China for its handling of COVID-19, with some members of the government accusing China of acting complacently in handling the outbreak.
Analysts say this could be a boost for Bitcoin. Chris Burniske, partner at Placeholder Capital, explained the following:
“If China’s CNY continues to weaken against the USD, then we could have a repeat of 2015 and 2016, where the strength of BTC coincided with the weakness of the yuan.”
Considering that there is a feeling that Bitcoin is a valid and hedging investment for the Chinese, this could be the case. BTC’s recovery on yuan weakness would also echo what we saw last year.
Far from the only macro factor that increases BTC
A fall in the Chinese yuan is not the only macroeconomic factor that analysts say will drive (or has) fueled Bitcoin in current times.
To respond to the COVID-19 outbreak, governments and their Central Bank counterparts around the world have been forced to take action. According to estimates, they have injected a $ 20 trillion (USD-denominated) stimulus into the global economy.
Investors like Paul Tudor Jones, a hedge fund manager worth billions, think this stimulus will cause big money inflation, driving demand for scarce assets like Bitcoin.
The world economy is in intensive care for various factors, the most damaging is the financial coupled with political mismanagement, the retaliation does more damage. Blockchain-bitcoin technology can help there are great possibilities for cryptocurrencies but especially for bitcoin
Disclaimer: This press release is for informational purposes information does not constitute investment advice or an offer to invest. The views expressed in this article are those of the author and do not necessarily represent the views of infocoin, and should not be attributed to, Infocoin.