In recent years it has been demonstrated what Bitcoin can do and its influence in other markets and national currencies, this time, the Chinese Yuan suffered a fall after an increase in the price of the cryptocurrency, the funny thing is that both events are connected.
Bitcoin has registered an increase of nearly 10% on the morning of Monday, compared to yesterday, after increasing its price by more than USD 1,000 in the last 24 hours, a fact that coincides with a fall that has been marking the Yuan for two days and that is already in the order of 2%, which compared to the Bitcoin movement is not representative, but in the stock market things are a bit different and similar falls to this leave much to think about what is happening in the economy of China.
This fact is being attributed to recent statements by US President Donald Trump of a 10% increase in import tariffs on Chinese products that will be in force since September of this year and as a result of the great economic tensions between these two countries. Bitcoin increased its value by around 9.94% from USD 10,700 to USD 11,764 in the last 24 hours.
This correlation is not something new, in the past it has been possible to appreciate how the economic problems in China have somehow managed to strengthen the cryptocurrency.
In 2017, when Bitcoin experienced its highest point so far, going from around USD 1000 at the beginning of the year to USD 20,000 in December, the Yuan came from a severe crisis in 2016, which could have a great impact on the world of cryptocurrencies, this fact is not exactly the cause of the bitcoin bull run but it did have a lot of influence. In 2017. there was a huge appetite on the part of the Chinese population to acquire cryptos, this linked to the great depreciation that their currency suffered and the need of the inhabitants of this country to have a refuge from their values, because the Chinese government has established very strict policies regarding the exchange of currencies, prohibiting the gold trade, establishing a sharp control of iron capitals and prohibiting cash withdrawals through ATMs at the country’s borders.
The Chinese government considers that some uses of cryptocurrencies, such as financing companies in exchange for the issuance of these currencies, are not accredited by the authorities and are considered a fraud or can hide money laundering.
However, Chinese traders can easily exchange Bitcoin for fiat money, despite the fact that the People’s Bank of China banned the trade (currency exchange) of fiat to cryptocurrencies in September 2017, forcing exchange houses to leave the country and greatly limited operations.
Chinese merchants who need to sell their cryptocurrencies in Yuan can go to a creator of the free sales market, such as those registered in exchange houses such as Huobi and OKEx, to be contacted with the buyers and send the cryptocurrencies after receiving a transfer through from a bank, AliPay or WeChat Pay.
The Chinese government maintains strict capital controls, limiting the amount of foreign currency that anyone can buy or sell to USD 50,000 a year. To solve this problem, different Chinese users have chosen to use cryptocurrencies to move money and safeguard its value.
While the yuan has been greatly affected by the US trade war. UU. and China, the new increase in the tax on products imported from China, has led the currency to depreciate more against the dollar, which is possibly creating new interest in Bitcoin by the Chinese inhabitants as has happened in the past This together with other factors such as the approach of the Bitcoin halving, new regulations and market players seeking safe adoption could lead to the next rise of Bitcoin, experts say there is a great possibility of seeing new Bitcoin highs for the months following.
Despite the increase in the price of Bitcoin, the main altcoins do not have the same momentum as seen on previous occasions, this strengthens the possibility that Chinese money is entering Bitcoin and justifies the rise in prices. Litecoin (LTC) has experienced a slightly higher increase than Bitcoin, it is quite possible that this litecoin boom is due to the halving that occurred earlier this Monday. On the other The dominance of Bitcoin continues to grow and is already approaching 68%. Earlier this year, the dominance of bitcoin was 51%, that is, it has increased 17%, which implies the capital outflow of the altcoins and that this capital is being captured by Bitcoin.