The price of bitcoin surged nearly 20% during the week ending 3rd June, rising to its highest point in 20 months. But what was the cause of the increase? Mainstream media sources have largely attributed this sharp increase to demand from the Chinese market, prompted by yuan devaluation. But not everyone agreed with this explanation, as some market experts asserted that the rally was tied to other developments both within and outside of the digital currency ecosystem.
Xu Qing, a spokesperson for Huobi , painted a different picture. Though Qing represents one of the largest bitcoin exchanges by volume, accounting for 41.91% of this week’s trades, he saw the movement as part of a broader series of stresses on the Chinese financial markets.
Qing told CoinDesk: "The devaluation of RMB has some influence [on bitcoin’s recent rally]. [But] the domestic stock market has been weak since last September. A convenient alternative investment like bitcoin is easy to be accepted by the traders." Still, other market observers were quick to stress that this was the predominant factor.
Arthur Hayes, co-founder and CEO of BitMEX , voiced support for the idea that concerns about yuan devaluation helped drive bitcoin prices higher, as panicking Chinese market participants bought into bitcoin to avoid losses.
"The fears of a sharp yuan devaluation are rising. It was set off by the People’s Bank of China weakening the yuan to the lowest levels since March 2011," Hayes told CoinDesk. Crying foul
However, the developments in the Chinese markets seem to have once again opened a continued subject of debate in the bitcoin trading community, the perception that Asia-based exchanges are using unfair or illegal tactics to drive market activity.
Petar Zivkovski, director of operations at bitcoin trading platform Whaleclub, told CoinDesk that in his view, this correlation with the yuan is […]
