By CCN.com: Bitcoin has already come of age as a safe haven currency, a market analyst has pronounced. According to eToro’s senior market analyst Mati Greenspan, the cryptocurrency is trading at a premium of over $100 in Hong Kong on the TideBit exchange.
In Greenspan’s view, this a demonstration of the cryptocurrency’s ability to serve as a refuge currency in uncertain times.
The Hong Kong premium is a signal of heavy demand for Bitcoin in the city-state following violent protests last week. The protests were held over a controversial extradition bill leading to Hong Kongers clashing with the police mid last week.
Traditionally, in times of heightened economic, political or social risks gold and safe haven currencies such as the Japanese yen have benefited. Bitcoin now seems to have joined this elite league as has been demonstrated in Hong Kong and elsewhere.
Last week Reuters reported that Hong Kong’s elites had begun moving their assets abroad over concerns on the extradition law. This is significant considering that a 2018 Credit Suisse report estimated that the number of Hong Kong’s super-high networth individuals (worth over $100 million) had grown to 853.
Primarily, the concern is that the extradition bill would undermine Hong Kong’s legal and judicial system, which have helped turn the city-state into an international finance hub.
While the controversial extradition bill has been suspended, Hong Kong still faces a rocky path ahead. The protestors now want the bill scrapped and not just suspended. This has raised the prospect of further confrontation between the public and the police. Public anger has also yet to recede and Hong Kong’s leader, Carrie Lam, has been urged to resign.
This is not the first time Bitcoin is being tested as a safe haven currency this year. As trade tensions the world’s two largest economies have risen resulting in the two giants slapping retaliatory tariffs against each other, the price of Bitcoin has gone up.
Analysts have also noted that bitcoin and the Chinese yuan have been inversely correlated. This includes London School of Economics’ macroeconomics researcher, Garrick Hileman according to LeapRate:
We are observing a strong inverse correlation between the [Renminbi] RMB’s value and bitcoin, meaning that recent RMB declines over trade tensions have been closely matched by increases in the value of bitcoin. This is not the first time we’ve seen significant increases in the value of bitcoin taking place alongside yuan concerns.
As CCN.com previously reported, the rise in Bitcoin’s price as the Chinese yuan falls has been attributed to attempts to circumvent capital controls in China without getting the government’s attention. With Bitcoin being one of the tools being used, this has allegedly caused its demand to surge.