There were have been some suspicions that Bitcoin and the Chinese Yuan are connected to each other in some way, but now, there is some evidence that this might actually be the case.
A recent report revealed that just after the President of the USA declared tax changes on imports from China, Bitcoin started an upwards rally. The Chinese Yuan allegedly fell down to its lowest value just when China was planning to oppose Trump’s announcement.
This synchronized behaviour of the two has made many believe that there is some ground to these suspicions.
Garrick Hileman, the head of Blockchain.com, commented on the situation. He stated that his team is noticing a “strong inverse correlation” between Bitcoin and the Chinese Yuan although he does mention that his team does not yet know for a fact whether Bitcoin’s recent rally is by trade tensions or not.
Dovey Wan is a crypto enthusiast on Twitter, and she tweeted the charts below. The charts do seem to be correlated no matter how you look at it.
Maybe just a coincidence but you tell me
Bitcoin is winning the trade war while China and US is a lose-lose pic.twitter.com/8FmVcaHjjh
— Dovey Wan 🗝 🦖 (@DoveyWan) May 13, 2019
If you are not satisfied enough, there is some more evidence to validate this theory. Over the past couple of weeks, crypto was being sniffed out by the regulators in Beijing on a large scale. WeChat recently stopped any sort of crypto-related transactions on its platform.
OTC trades were especially targetted. Dovey Wan explains that this crackdown might affect local liquidity somehow. This behaviour was last seen by Alipay when it removed all of Bitcoin OTC trade accounts.
The theory that Bitcoin and Chinese Yuan are correlated was considered controversial. Alex Krüger, a macro analyst, tweeted
“bitcoin being used as a hedge for US-China trade wars is nonsensical”.
He declares that bitcoin’s crashes and upward rallies have nothing to do with this. He further jokes about the correlation saying that it is as silly as saying that Bitcoin and avocados are related.
The Bitcoin – Chinese Renminbi correlation that the world has been spinning is similar to the Bitcoin – Avocado correlation. pic.twitter.com/yHkeTI8Z3B
— Alex Krüger (@krugermacro) May 17, 2019
Some crypto enthusiasts like Hileman believe that bitcoin is gaining a reputation as the ‘digital gold’. So it is not far-fetched to say that it might be used as a hedge against macroeconomic risks.
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