The coin market on Tuesday morning saw Bitcoin gain 1.14 percent scaling the $10,000 mark as demand for the digital asset continues to rise. Bitcoin had on August 30, dropped to $9,337 after scaling past the $10,000 resistance in June.
The latest price surge for the premier digital asset was traced to the high demand for forex in China in the wake of the trade war between the country and the United States. This has seen the Chinese currency Yuan drop to a ten-year low, clearly causing investors to seek alternative assets for which Bitcoin may have come handy.
The recent boost in the price of Bitcoin saw the capitalization of the cryptocurrency soar to $180.90 billion and a gain of more than 70 percent of the coin market capitalization.
The Yuan fall in value is the lowest since the 2008 financial crisis such that gave rise to the demand for offshore assets. The latest price movement has correlated with the recent trade war between the two countries. Prices of metals such as gold and that of the Japanese Yen appreciated when the US placed additional 15 percent tariff on Chinese goods. This was mainly due to retaliatory action by Chinese investors against the US move on September 1.
Investors have been moving their assets into alternative assets and it has been shown that gold and Bitcoin are favorite alternatives to many investors with the digital currency being the favorite of most investors.
A Safe Haven for Investors
With the Chinese government’s propensity to control capital control, many investors are seeking hedging assets to avoid being caught unawares in any unforeseen monetary policies that may be introduced by the government.
Selena Wang, a media analyst in a tweet wrote:
“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.”
Peter Schiff of Euro Pacific Capital does not believe that the Yuan pressure is responsible for the latest Bitcoin surge. According to him,
“As trade tensions rise and the yuan falls, Bitcoin is trading back above 10K. But don’t believe the hype that this rise reflects safe-haven buying, similar to gold. Bitcoin is not being bought by investors searching for safe havens, but by speculators betting that they are.”
As the trade war de-escalates, we would see what effects it would have on the price of Bitcoin in the coming weeks.