The U.S.-China trade war, if escalates to new levels could be the catalyst to Bitcoin price hitting the December 2017 highs an analyst has told Kitco News.
According to DailyFX’s senior currency strategist Christopher Vecchio, bitcoin has lately been inversely correlated with the Chinese yuan. Being an effective method of moving value around the world, its price appreciated as the yuan weakened:
"In an environment where the global financial system looks like it is potentially at risk because of the world’s two largest economies going at odds, people may be looking for alternative avenues to find ways to circumvent the capital controls being put in place to move their money around without the Chinese or U.S. government taking stock of it."
But per Vecchio, it is unlikely for bitcoin to return to the $20,000 record high. The only exception is if the relationship between the U.S. and China worsens, weakening the yuan even further. According to Vecchio this would mean the yuan falling to 7 or lower against the dollar:
"Dollar-yuan going past seven would be a kind of ‘world on fire’ type of event. Chinese policy makers control their currency rates so moving it beyond seven would be seen as effectively an escalation of the trade war to a new realm altogether."
Currently, one dollar is exchanging for approximately 6.9042 yuan. In the past five years the USD/CNY exchange rate has not crossed the 6.95 mark leave alone the 7.00 level.
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