Will China Push Bitcoin Price Over $1,000?
China has had quite the 2016. Between being a large target of much of the animus in President-elect Donald Trump’s campaign and its struggles with its currency, all has not been quiet on the Eastern Front, financially speaking. And this may be exemplified by the Bitcoin price.
The cryptocurrency has had a fantastic 2016 and has been on an absolute tear recently, hitting highs it hasn’t achieved since its peak in late 2013. On the year, the Bitcoin price has jumped 122%, and 32.5% in December alone. Gold comparatively hasn’t fared as well, which may point to BTC becoming potentially the risk asset of choice for investors. And with Bitcoin price’s push to $1,000, this may be the age of BTC.
But what’s driving the shift to Bitcoin? Among other things, it appears China is a big part of the engine that drives Bitcoin price. With the country’s harsh monetary policies and the aforementioned weakening yuan, some are looking to BTC to help safeguard their money’s value. The yuan may drop below 7.00 per U.S. dollar, which would be the lowest level since 2008, so investors may see a high Bitcoin price as a port in the storm.
China’s foreign-exchange reserve fell by about eight percent in 2016 to $3.05 trillion as of November, which coincided with the weakening yuan.
Deutsche Bank AG (NYSE:DB) strategist Gautam Kalani recently called the yuan “the most expensive” currency in the world on a trade-weighted basis, according to Business Insider. (Source: “China is behind the latest bitcoin craze,” Business Insider, December 30, 2016.)
With the U.S. dollar gaining strength and the U.S. Federal Reserve set to hike interest rates throughout the year – which will lend another boost to greenback – the yuan’s continued free fall in relation to the dollar may push the Bitcoin price at an even higher rate than we saw in 2016.
Whatever does eventually result from the yuan-dollar dynamic, BTC will certainly be exciting to watch in 2017, one way or the other.