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Chinas Digital Yuan Will Target Retail Payments First, Ex-Central Banker Says
Former PBoC head Xiaochuan Zhou says the digital yuan will enable retail payments first, but might need a different technical design for cross-border payments.
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Former PBoC Head Chinas Digital Yuan Will Favor Payments and Retail
n Longest-serving PBoC governor says China will continue to focus on its digital yuan as a mechanism for domestic retail systems and paymentn
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Fake Website Prompts Chinas Central Bank to Deny Digital Yuan Launch
Despite online impostors claiming otherwise, the Peoples Bank of China said the countrys stablecoin project is still in the testing phase.
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China Central Bank Official Digital Yuan Should Have Controllable Anonymity
Chinas proposed digital yuan should strike a balance between protecting privacy and regulatory enforcement, a central bank official said.
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Binance Launches P2P Trading for Chinese Yuan
n Major cryptocurrency exchange Binance launches peer-to-peer trading for Bitcoin, Ether and Tether against the Chinese Yuann
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Circle CEO Says China’s CBDC Could Help ‘Internationalize’ Yuan
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Inverse Bitcoin Price to Yuan Correlation Sets a New Record
Over the past few months, a trade war has been raging between the U.S. and China. Throughout this, Bitcoin (BTC) has managed to post stellar gains, rallying by some 100% since the latest leg of this dispute began.
While many believe that this is nothing but a coincidence, data is starting to show that the trade war has had a substantial effect on Bitcoin’s dynamic.
Related Reading: Falling Renminbi Serious Use Case for Bitcoin: DBS Chief Economist
Bitcoin Trading at Record Inverse Correlation With Yuan
Bloomberg has reported that the 30-day inverse correlation between Bitcoin and the yuan has reached a record low, implying that the trade war has forced Chinese investors to adopt BTC.
Speaking to Bloomberg, Dr. Garrick Hileman, the head of Blockchain.com’s research division, explained that this can be verified by the fact that “people in Asia were paying more for Bitcoin than elsewhere when the yuan fell”, looking to certain premiums on platforms like Huobi.
Of course, there were some occasions where a negative premium (a discount, to be accurate) was observed in China. Yet Hileman asserts that the negative correlation has much to do with the trade war.
If he’s correct, the negative correlation corroborates the whole idea that Bitcoin is a form of “digital gold”, in that it has similar characteristics and price patterns to the precious metal, yet it exists in a digital setting.
Not a Safe Haven?
Despite the growing correlation, some have been quick to deny that Bitcoin is acting as a safe haven in the raging trade spat.
In a tweet published in the wake of a recent surge in BTC and simultaneous collapse in the Yuan, Peter Schiff wrote that the recent rally isn’t a sign that the cryptocurrency is a beneficiary of “safe haven buying [that is] similar to gold”. Instead, the gold proponent argued that Bitcoin is being bought up by “speculators” betting that investors are searching for a store of value.
This comes shortly after he claimed that Bitcoin’s inability to maintain gains in this tumultuous macroeconomic environment is a sign that it has “failed the safe haven test”. As reported by NewsBTC at the time, the fact that Bitcoin failed to hold its gains during a trade war development doesn’t bode well for advocates of BTC being digital gold.
Related Reading: Bitcoin Could Follow Gold Fractal With 44% Drop to Under ,000
Of course, the high volume of Tether (USDT) trades — which are widely believed to be completed by Chinese traders — tells a different story. But Schiff has been quite staunch in his belief.
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Bitcoin Extend Gains as Yuan, Pound Hits Record Low
Bitcoin continued its ride to the upside as investors/speculators weighed in the prospects of dwindling government currencies.
The benchmark cryptocurrency today established a session high of ,500, bringing its five-day gains to as high as 12.44 percent on San Francisco-based Coinbase exchange. The move appeared after a depressive August, wherein bitcoin lost about 25 percent of its market capitalization largely owing to overbought conditions. Nevertheless, the asset kept its long-term bullish bias intact, confirmed by its year-to-date performance, which remained well above 150 percent despite the interim downside corrections.
Bitcoin and Underperforming Government Currencies
The current bitcoin price boom followed the underperformance of three government currencies.
Yuan against US-China Tariff Attacks
China’s Yuan, for instance, briefly dipped to its 11-year low in overseas trading early Tuesday morning, hitting ¥7.196 RMB a dollar valuation. The price action brought the currency’s year-to-date returns against the US dollar down by 4.6 percent. The offshore yuan, meanwhile, touched the level ¥7.179 per dollar, also down by 4.4 percent on a year-to-date basis.
The slip followed the decision of Washington to slap additional tariffs of 15 percent on Chinese goods from September 1. Beijing punched back with new charges on US imports, battering investor sentiment. Chinese stocks, nevertheless, held their head high this Tuesday, supported by growth in its manufacturing sector and a US holiday that gave the Asian market some time to breathe.
Pound against Brexit Fears
The UK Pound, on the other, dipped to its three-year low on mounting Brexit fears. Sterling fell by as much as 0.8 percent to .197 a day after interim Prime Minister Boris Johnson threatened to call a general election on October 14. His reaction, in turn, came in response to rebel Tory MPs who warned that they would join forces with Labour to stop Johnson from securing a Brexit withdrawal agreement with the European Union.
Argentine Pesos against Capital Controls
Argentine Pesos looked clueless about its direction on Tuesday after delivering a stable Monday against the dollar. On Sunday, the Argentine government decided to impose capital control to try to prevent Pesos from fleeing into foreign assets. The move expects to safeguard Argentina’s debt from dwindling into a crisis mode, which means the official markets which support convertible Pesos instruments were looking at lower volumes.
The Pesos today officially opened at the rate of 57.49 a dollar, although its price in the black markets expects to be much widened.
Bitcoin Promises Upside Run
According to Bloomberg Market strategists, the bitcoin price’s correlation with – at least –yuan is growing. It means that more and more investors are looking at the cryptocurrency as a hedging asset against capital control. The uncertainty looming over the US-China trade situation could send China’s fiat further lower, allowing investors to stake in bitcoin, which remains a speculative trade vehicle.
Bitcoin's correlation with the USD/yuan is rising. @business market strategists point out it may reflect the view of #bitcoin as digital gold. Weakening yuan is symptom of the trade war and its effects on economic growth. In turn, gold & bitcoin can prosper pic.twitter.com/12pc1kS6n1
— Selina Wang (@selinawangtv) September 3, 2019
A similar scenario brewing in Argentina, as mentioned above, could allow a small portion Argentines to purchase bitcoin as a tunnel to send money abroad.
"Amid a turbulent 365-day period where the Argentine Peso has lost over half of its value against the dollar, the country has imposed new capital measures that prevent individuals from buying foreign currency and companies from holding a reserve in foreign currency."#Bitcoin pic.twitter.com/Jq4T2tCr2O
— Alex Melen (@amelen) September 3, 2019
Meanwhile, bitcoin is trading at a ,000 premium in Argentina, according to data available at peer-to-peer marketplace LocalBitcoins.
Has this ever worked? No wonder why crypto demand in Argentina is always so high #econ #bitcoin
Argentina imposes capital controls https://t.co/LP93kxAN8U
— Rob Viglione (@robviglione) September 2, 2019
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