The US-China trade war is beginning to have ramifications on the forex and cryptocurrency markets.
According to a recent report by Bloomberg, the inverse correlation between yuan and Bitcoin has hit the largest value ever as the Chinese currency continues to weaken.
The growing negative correlation highlights a scenario where Chinese investors are potentially using the digital currency as a safe haven against ongoing Yuan weakness.
“There’s corroborating evidence for this, in that people in Asia were paying more for Bitcoin than elsewhere when the yuan fell,” Dr. Garrick Hileman, a researcher at the London School of Economics and Blockchain.com’s research director, told Bloomberg. “You can see it in the premium price paid sometimes for Bitcoin in exchanges like Huobi that primarily cater to Chinese.”
This would be a significant development as Bitcoin just became legally recognized by China’s Hangzhou Internet Court, indicating the potential for an influx of new capital into the digital currency markets if restrictions were to loosen. However, given the country’s track record, and current plans to launch a centralized digital currency, major changes are unlikely.
Bitcoin is currently up 1.1% on the day to $10,480, giving the largest cryptocurrency a market cap of $187.8 billion.
Disclaimer: This article’s author has cryptocurrency holdings that can be tracked here. This article is for informational purposes only and should not be taken as investment advice. Always conduct your own due diligence before making investments.