Bitcoin-yuan divergence is reaching new highs and it is further increasing the speculations that the Chinese are trying to find safety in the world’s largest decentralized cryptocurrency as we are reading in the coming altcoin news below.
The bitcoin and yuan have been going to different directions for a while now and the inverse correlation has reached a record last week according to the Bloomberg analysis of their 30-day correlation. The correlation between the two assets could be resulting from a number of reasons including the Chinese trade war in the United States and the central bank’s monetary policy and the slowing economy. According to the CEO of Broctagon Don Guo, bitcoin is now used as a way to hedge against traditional market volatility. He stated:
“The role of these assets has essentially been reversed. Traders have been expecting a fall in the yuan for a while, in light of international tensions and the central bank monetary easing policy. With the trade war raging on, nervous forex traders have started to look at ways to diversify their portfolio and hedge against any market volatility. And, ironically, this has led them to turn to bitcoin, which has long been considered a notoriously “risky” asset, to hedge against a traditionally safer investment.’’
This is not the first time this year that the correlation between bitcoin-yuan is becoming more evident since it has also happened in April and May. This happened when the tensions increased with the deterioration of the US-China trade relations as per Dr. Garrick Hileman who is the director of research at blockchain.com:
“A lot of traditional assets are flashing warning signs so investors are looking elsewhere. Fears of an incoming global recession has led to a flee from the stock market and bond yields aren’t looking too appealing. As digital assets are less dependent on the political climate, they are increasingly being seen as a “safe haven” asset. This goes double for China, where the government has taken positive steps in it’s attitude towards cryptocurrencies, adding weight to its appeal as a hedge. It’s likely this will continue whilst market fears drive other assets on a downward spiral.’’
As we reported in the latest cryptocurrency news, China made headlines with the plans to release a state-backed digital token and as the crackdown is still ongoing, there are some signs that the country will rethink the crypto-related policies.
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“$BTC Red Alert!! Big move should happen in the next few days or early next week!! Ema’s are all bunched up together. And right at resistance,” he wrote on Twitter.https://twitter.com/CryptoFib/status/1173407775965233152 The trader also elaborated on a potential Bitcoin breakout. He leaned to the low side, suggesting a wick down below $9,000 which would not last for very long.
“It has always been my theory that $BTC is just building a new base to move off of. Could it wick down to 8500? Sure it could, but too many people are looking at that area and calling it,” he said.Other traders also suggested that a big move could be coming Bitcoin's way very soon. Right now, the bulls are struggling to overcome resistance at $10,450 and BTC has been below that for the past week. On the low side, a fall to $10,000 is where the first support zone for BTC lies. Just like DC Forecasts, many other best cryptocurrency news sites reported about something big potentially coming this week.
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