Bitcoin once shared a near-perfect negative correlation with the Chinese Yuan. As the national currency fell, the cryptocurrency popped higher.
The starkly different assets established proximity in mid-2019 at the heights of the U.S.-China trade war. Bloomberg reported that investors used Bitcoin as a hedge against yuan’s intentional devaluation by the People’s Bank of China. Demand for the cryptocurrency was so high that people were willingly paying a $300 premium for it.
Correlation between Bitcoin and yuan in mid-2019 | Source: Bloomberg
Now, a year later, Bitcoin is anticipating a similar market growth as the U.S. and China engage themselves in a new form of “cold war.”U.S. Sanctions on China
Bitcoin’s bullish bias improved as White House National Security Advisor Robert O’Brien threatened to impose sanctions on China in retaliation to their proposed Hong Kong national security law.“It looks like with this national security law they’re going to basically take over Hong Kong and if they do … Secretary [of State Mike] Pompeo will likely be unable to certify that Hong Kong maintains a high degree of autonomy. “And if that happens there will be sanctions that will be imposed on Hong Kong and China,” O’Brien told NBC.
Sanction-hit countries have witnessed higher demand for Bitcoin in the last five years. The tech-savvy people of Venezuela, for instance, resorted to the cryptocurrency as their bet against criminally higher inflation. In Iran, citizens started using Bitcoin to circumvent the ban on international ...