Bitcoin has risen above $8,000 once again following a big jump around 11AM London time.
Bitcoin rose in one big candle from $7,600 to $7,900 to then go on rising to a recent high of $8,100, currently trading at $8,000.
The reason is probably China with bitcoin following CNY fairly closely recently.
Something has changed in China as after some considerably sideways, CNY opens with a big gap:
CNY fell by 1% to its lowest level for the year with the reason perhaps being that China’s central bank, PBoC, is now apparently willing to let it slide.
“I don’t think along this mathematical scale, any number is more important than other numbers,” PBoC Governor Yi Gang said according to Bloomberg. He also said “a little flexibility” in the yuan is good for the economy as it acts as stabilizer for the balance of payments.
Meaning China currently has no intention of intervening in the market to defend the 7 CNY per USD line which it hasn’t crossed for a decade.
US Treasury Secretary Steven Mnuchin said on Saturday that “the decision not to intervene after intervening for a very long period of time may lead the market to view that there is a desire to have the currency to weaken.”
Following tariffs on China, there was speculation of another round of devaluation to cancel off the effects of tariffs.
PBoC is suggesting they have no intention of intervening in the market, contradicting previous reports they were to defend 7 CNY to the dollar. While now Yi said:
“The People’s Bank of China, is already pretty much not intervening in the foreign-exchange market for a long time, and I hope that this situation will continue — not intervene.”
This could potentially explain bitcoin’s jump as a correlation between bitcoin and CNY has developed recently presumably because Chinese residents are trying to hedge with bitcoin any potential fall in CNY’s value.
They do so Over the Counter (OTC), buying USDT in a peer to peer manner to then exchange it for bitcoin or any other crypto on crypto only exchanges.
CNY has fallen to 7.10 against USDT in OTC trading, considerably above its value against the dollar, with this suggesting increased demand and thus so potentially explaining the sudden bitcoin jump.