Trump’s trade war against China seems to be a good thing for the price of bitcoin.
This would suggest that the queen of cryptocurrencies might have become a safe haven against the devaluation of the yuan.
In fact, analysing the last 30 days, there would be an inverse relationship that became more evident in the last week between bitcoin and the Chinese currency. Moreover, this correlation seems to be intensifying as the yuan becomes weaker.
London School of Economics researcher and Blockchain.com research director Garrick Hileman said:
“There’s corroborating evidence for this, in that people in Asia were paying more for Bitcoin than elsewhere when the yuan fell. You can see it in the premium price paid sometimes for Bitcoin in exchanges like Huobi that primarily cater to Chinese”.
Moreover, according to Hileman, the inverse correlation would have become more evident in April and May, just as tensions between the US and China increased due to the deterioration of their trade relations.
In fact, the main cause of the devaluation of the yuan would be precisely the trade war underway with the USA, unleashed some time ago by President Trump, to which China is reacting by devaluing the currency in order to compensate for the increase in duties imposed on Chinese goods entering the USA.
In the last 6 months alone, the yuan has lost more than 6% of its value against the US dollar, bringing it to an all-time low for at least 5 years and this could have led many Chinese to invest in bitcoin, particularly in recent weeks, using the Huobi exchange, for example.
Moreover, in recent months China’s attitude towards bitcoin, and cryptocurrencies, has changed considerably, probably due to its willingness to launch their own national digital currency.
This means that it could become one of the leading markets for bitcoin in the near future, probably seen as an alternative to the yuan itself as a result of its depreciation.