China has seen the yuan fall below 7 to the US dollar with Bitcoin supposedly profiting, breaking above $11,000 after weeks of bearish movement.
The Chinese currency has triggered some panic in financial markets in dropping to levels not seen in over a decade, with stocks and emerging market currencies suffering as a result.
After announcements from Donald Trump of tariffs on Chinese goods worth $300bn, the yuan slid to boost exports elsewhere, triggering a scramble for safe-haven assets.
“The nervousness in financial markets over the falling yuan in recent weeks has reached panic levels,” says Tom Elliott, international investment strategist at deVere Group.
“Just as in July and August 2015, when China engineered a small devaluation to support growth, global stock markets have panicked.
“Investors are urged to check their portfolios to ensure that they are best-positioned to capitalise on current opportunities and sidestep the risks.”
Bitcoin and China
Gold, well regarded as a safe haven asset, has benefited from global uncertainty in recent months, its price hitting six-year highs and consolidating above $1400/oz.
Bitcoin, often described as digital gold, is likely to see similar interest, particularly if the US-China trade war continues to bite.
“It’s no coincidence Bitcoin’s surge over the weekend has coincided with Donald Trump’s announcement,” says Simon Peters, analyst at trading platform, eToro.
“Chinese investors are casting around for alternative assets for their wealth.
“Given that Chinese investors make up a large proportion of crypto investors, there’s a strong possibility some are backing Bitcoin’s chances against the yuan.”
After challenging its 2019 high of over $13,000 in early July, Bitcoin crashed back below $10,000 the next week, going as low as $9,431.52 on July 27th.
Could China now drive the cryptocurrency to greater highs?
The country has a complicated relationship with cryptocurrency and blockchain technology. While embracing the ability to monitor and track business activity using DLT, China is less at ease with a form of money that it cannot directly control.
“Crypto is double-edged sword for China in the sense that it is first seen as a danger to the state, but increasingly seen as a weapon against Western financial hegemony,” Dr Tim Kane, JP Conte Fellow in Immigration Studies at the Hoover Institution at Stanford University, has said.
The post China’s Yuan Falls To Financial Crisis Levels, Bitcoin Back Above $11,000 appeared first on Independent Newspapers Nigeria.
Source: Independent
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