Bitcoin Looks to Strengthen Value as China’s Yuan Currency Witnesses an All-time Low
China’s Yuan Witnesses an All-time Low, Bitcoin to Serve as an Alternative?
According to the latest News BTC report, China’s countrywide currency, Yuan has been depreciating over time, with its value currently devalued by nearly seven percent. As per the claims made, several factors contributed to the plummeting in the currency’s value, which include “weaker equities” and the country’s central bank’s “vague monetary stance”.
In the past six months, the drop in value has amounted to a total of nine percent against the USD. Investment Strategist, Ken Peng was quoted saying that investors are placing bets that Yuan will fall more than the current 6.93 percent.
He further argued that the central bank, People Bank of China, has since cut the reserve requirement ratio (RRR), which was done to show people that China has entered a trade war with the U.S. The cut is also problematic for the country because it implies that the central bank is taking a neutral stance, that is, neither slowing down the economy nor boosting it.
Another Chinese Analyst, Fraser Howie, was quoted by CNBC saying that,
“China is probably facing its worst period since the global financial crisis. All news is against it.”
China isn’t the first country to watch its national currency dip along time, as both Turkey’s Lira and Iran’s Rial have faced a similar situation with the U.S standing in opposition. However, the latter two managed to turn to Bitcoin as an alternative that would limit the drops in currency value. Unfortunately, the same trend has not been witnessed for China.
Since most of China’s crypto exchanges have closed following the country’s ban, it does not seem like the people are interested in investing in Bitcoin. News BTC shared data from Local Bitcoins, which showed that the Yuan-to Bitcoin ask price was only $20 more than the global standard, which is not significant to conclude that the rise in Bitcoin volume is associated with Yuan’s low value.
Ultimately, the lack of correlation proves that the two assets on hand depend on different factors. It has been argued that while traditional currencies are influenced by traditional factors such inflation, debt, businesses, etc., cryptocurrency trends are witnessed based on sentiment, news, and real life uses.
Will China eventually consider Bitcoin as an alternative? Or will they firmly stand by their ban? Let us know in the comments below.