Crypto News

The Chinese Yuan is Falling Once Again — and That’s Key for the Bitcoin Bull Case

Last year, one of the biggest narratives in the Bitcoin market was that tensions between China and the U.S. — which culminated in a massive trade war — was pushing cryptocurrencies higher.
Whenever President Donald Trump tweeted about U.S. relations with China, BTC responded, both rising and falling with the geopolitical trends. Once, when Trump announced that tariffs would be applied to billions worth of Chinese goods, both Bitcoin and the U.S. dollar against the Chinese yuan jumped in tandem.
With the Chinese yuan starting to underperform, the narrative that geopolitical tensions are influencing the Bitcoin price has begun to be mentioned once again.
Related Reading: Crypto Tidbits: Satoshi Isn’t Dumping His BTC, China ‘Bans’ Cryptocurrency Mining
The Chinese Yuan is Faltering
Although U.S.-China relations were back on the mend heading into the last quarter of 2019, it is once again getting heated between the two world superpowers.
Responding to the record Hong Kong protests last year, the mainland Chinese government is looking to impose a stringent security law on the region. The U.S., which designates Hong Kong as a special economic zone due to its status as the most democratic Chinese city, has retaliated.
Trump said that he and Washington would react “very strongly” should the law pass, with others in government and around the world reacting the same way.
The Chinese yuan, as such, has sunk, breaking out of resistance as prominent Bitcoin investor and crypto executive Matt D’Souza depicted in the chart below.
Chart of USD/CNY trading pair from Matt D’Souza, CEO of Blockware Solutions and Blockware Mining and a prominent Bitcoin investor.
Adding to the pressure against the yuan, the U.S. has begun to increase its pressure against China over its handling of COVID-19, with some members of government accusing China of acting complacent in the handling of the outbreak.
Boost to Bitcoin
Analysts say that this could be a boost to Bitcoin. Chris Burniske, a partner at Placeholder Capital, explained:
“If China’s CNY continues to weaken against USD, then we could have a 2015 and 2016 repeat, where BTC strength coincided with yuan weakness.”

If China’s $CNY continues to weaken against $USD, then we could have a 2015 and 2016 repeat (pictured below), where $BTC strength coincided with yuan weakness. https://t.co/ISVJAZMX5O pic.twitter.com/VApfxe1SFw
— Chris Burniske (@cburniske) May 22, 2020

Considering that there is a sentiment that Bitcoin is a hedge and valid investment for the Chinese, this could very well be the case. BTC rallying on yuan weakness would also echo what we saw last year.
Far From the Only Macro Factor Boosting BTC
A falling Chinese yuan isn’t the only macroeconomic factor that analysts say will (or has) boost Bitcoin in the current times.
To respond to the COVID-19 outbreak, governments and their central bank counterparts around the world have been forced to spring into action. They have injected $20 trillion worth of stimulus (denominated in USD) into the global economy, estimates suggest.
Investors like Paul Tudor Jones — a hedge fund manager worth billions — think that this stimulus will cause great monetary inflation, driving demand for scarce assets like Bitcoin.
Related Reading: The $90 Million BTC Pizza Story Has an Unexpected Silver Lining
Featured Image from Shutterstock

How useful was this post?

Click on a star to rate it!

As you found this post useful...

Follow us on social media!

Write a Comment

Related Crypto News

Crypto Analyst Releases Stock-to-Flow Model Indicator for BTC Bull Run
Updating its popular BTC price model, crypto analyst PlanB predicts the cryptocurrency could see a rally to $100K by...
Bitcoin Closes May Candle Above Crucial Resistance, and That’s Big for the Bull Case
Just over an hour ago as of this article’s writing, Bitcoin closed the price candle for the month of...
UK Government Seizes $185 Million From Dormant Bank Accounts for Crisis Relief
The UK government is seizing funds in dormant bank accounts worth approximately $185 million to fund its coronavirus relief...
Ethereum Makes 3rd Attempt at New Highs as Options Skew Turns Negative
Ethereum made its third attempt to set new local highs against its Bitcoin trading pair in 2020 yesterday. This...
Bitcoin Closing the May Candle Above $9,360 is Crucial For Bulls: Here’s Why
In just a few minutes’ time, Bitcoin will close May’s price candle. Analysts say that this close will be...
Max Keiser: There Isn’t Anything Crypto Altcoins Do That Bitcoin Won’t Do
Ever since the peak of the 2018 crypto bull market, Bitcoin has been front and center for most investors....

Featured Crypto News

Bitcoin Sells Off At $9.5K Ahead of Trump’s China Response; What’s Next
Bitcoin breaks below $9,500, a crucial support level, a day after breaching it to the upside. The cryptocurrency pared...
Bitcoin May Surge as Chinese Yuan Gets Fixed to Lowest Price in a Decade
Unlike Bitcoin and other free markets, the Chinese yuan market is fixed and somewhat controlled by the country’s central...
Coinbase Now Supports Tezos Staking Rewards for UK and Some EU Users
Major crypto exchange Coinbase is rolling out Tezos staking rewards for users in the United Kingdom and three European...
Digital Currencies Could Threaten US Geopolitical Power, Warns JPMorgan
“There is no country with more to lose from the disruptive potential of digital currency than the United States,”...
Ethereum Could Stage Strong Rally As Double Bottom Pattern Emerges
Ethereum nosedived below the $202 support zone against the US Dollar. ETH price revisited the $192 support and it...
Bitcoin Traders Now Eye $6-7Ks After 4 Failed Attempts to Break $10K
The price of Bitcoin is set to test lower levels as support after numerous attempts to break $10,000 have...