Following August, a month of relative calm in what is perceived as frequently volatile waters, bitcoin took to its sails this month by climbing nearly 10% to cross the $600 mark. The increased demand from Chinese buyers could very likely be a factor.
Bitcoin price pushed beyond the $600 milestone for the first time in over a month in the week that sees China – the world’s largest bitcoin trading market – host the G-20 summit with the world’s most influential and powerful economies at the table.
Over the weekend, the United States and China – the two biggest economies of the world – agreed to refrain from resorting to competitive currency devaluations. In the past, a devaluating yuan has often been the cause for Chinese investors turning to bitcoin as a store of value away from the yuan, with faith eroding from China’s fiat currency.
A ‘fact sheet’, issued jointly by the United States and China following talks between the Presidents of the two countries stated that both countries would “refrain from competitive devaluations and not target exchange rates for competitive purposes,” as reported by Reuters.
The fact-sheet also stated that China would specifically “continue an orderly transition to a market-determined exchange rate, enhancing two-way flexibility”.
China stresses that there is no basis for a sustained depreciation of the RMB (yuan).
However, the statement doesn’t seem to have inspired confidence among Chinese investors at a time when the yuan is near six-year lows against the US dollar. This, in turn, resulted in an increase of bitcoin buying from China.
With the majority of miners and buyers as well as the burgeoning bitcoin activity in the country, the prominence and role of China in the bitcoin ecosystem cannot be understated.
The last time bitcoin was found hovering by the $600 mark was over a month ago on August 2, the day of the Bitfinex hack. At the start of day, bitcoin was trading at $606.34. Following the hack during the course of the day day, the price of bitcoin crashed, losing nearly 20% of its value with the Bitstamp Price Index striking a low of $485.19 at 11:00 PM UTC.
Bitcoin is back in trading around the $600 scale. It is likely to continue in that range while investors from China drive demand for bitcoin, a currency that is devoid of any governmental or authoritative oversight where mandatory devaluations have occurred in the past. Bitcoin continues to bring respite to investors who see it as a store of value as they expect the devaluation of the yuan to continue.
At the time of publishing, the Bitstamp Price Index shows BTC to USD trading at $609.36
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All time references are in Coordinated Universal Time (UTC).
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