The connection between the Chinese yuan and the price of bitcoin appears to be weakening.
Despite assertions that macroeconomic fears in China are one factor boosting the price of bitcoin, the nation’s recent decision to lower the yuan’s currency peg by the largest amount since August notably failed to cause a significant change in the digital currency’s price this week.
Arguably almost entirely driven by long-term bullishness and sentiment, it’s become a passtime of bitcoin industry observers to attempt to correlate movements in the market with larger, macroeconomic trends, and China has become a particular point of focus given the outsized activity on local exchanges.
Still, in practice it remains to be seen whether this relationship is effective marketing or a sound indicator for traders, and this week’s events provided the latest data point in this ongoing exploration.
On 27th June, the People’s Bank of China (PBOC) reduced the yuan’s peg to¥6.6375 per dollar, which represented a 0.9% drop, Bloomberg reported . By 10:44 UTC, China’s currency had fallen ¥0.3% to 6.6473.
As a result, the yuan-dollar exchange rate was close to its lowest since December 2010.
However, in the wake of these events, the price of bitcoin hardly moved, fluctuating primarily between $630 and $660 on 27th June and falling into an even tighter range between $640 and $660 on 28th June, CoinDesk’s USD Bitcoin Price Index (BPI) revealed.
When the 29th June session began, the digital currency opened at $646.30, 2.5% higher than its opening value of $630.25 on 27th June.In contrast, bitcoin prices surged 8.7% on 24th June, additional BPI data shows, when the yuan hit a five-and-one-half-year low against the dollar, an event mainstream news outlets like CNBC sought to correlate with economic activity in China. Evidence and speculation When asked by CoinDesk, market experts had different interpretations of bitcoin’s recent stability […]
