Will the Chinese Flock to Bitcoin as A Result?
Essentially there are 2 factors at play when determining the value of a fiat currency. These factors tend to be political stability and interest rates. Unfortunately for China, they don't have much of either.
The Chinese Yuan has fallen sharply in value against the U.S. Dollar. 1 Yuan is now trading at $0.14 dollars. These are the lowest rates the Yuan has seen in roughly 11 years.
BREAKING: China yuan sinks to lowest point since 2008 amid trade war with US - AFP— Breaking911 (@Breaking911) August 26, 2019
Trade War Woes?
Amid a trade war with President Trump, the Chinese Government has cut interest rates in August. In addition to the trade war & cutting interest rates, China is also experiencing mass protests in Hong Kong. These protests have been going on for weeks and only seem to be escalating. It has even been reported that Chinese troops have been amassing in Shenzen, right across from the Hong Kong Border. Tensions are flaring as Hong Kong police has been accused of firing live rounds towards protesters.
It has been reported that 1.7 million Hong Kongers have taken part in one of the protests. The island has a population of 7 Million. The Chinese government would not want to appear weak and give in to the protesters demands. One can assume that this might be a historic clash between China and Hong Kong and hope that it doesn't end like Tiananmen Square.
The Hong Kong Dollar has also hit yearly lows against the U.S. Dollar amid the conflict. It is currently trading at $0.13.
Hong Kong has one of the world's highest number of millionaires per square foot.
It has been speculated here and elsewhere, that Hong Kongers and Chinese have been investing in Bitcoin to avoid losing purchasing power amid the weakening Yuan & Hong Kong Dollar. It might be the catalyst of Bitcoin maintaining its price of $10k. Should the conflict continue, we could see Bitcoin reaching higher highs.
Written by Jonathan Ganor
Writer & cryptocurrency aficionado