Divergence between bitcoin and the yuan: consequence of the US trade war. US-China | CryptoNews

The most important digital currency reached a record inverse relationship last week, according to a Bloomberg analysis of its 30-day correlation.

"There is evidence to corroborate this, since people in Asia were paying more for Bitcoin than elsewhere when the yuan fell," said Dr. Garrick Hileman, a researcher at the London School of Economics and director of research at Blockchain.com . and adds: "You can see in the premium price that is sometimes paid by Bitcoin in exchange houses like Huobi that mainly serves Chinese."

Speculation about the effect of China has focused on factors that weaken the yuan, from the trade war to the economic downturn. Also included is a court ruling in July that states that Bitcoin is a virtual asset protected by Chinese law, being the first time a local court has made such a decision, according to state media reports.

The inverse correlation between bitcoin and the yuan "became more evident also in April and May, and as tensions increased with the deterioration of trade relations between China and the United States," said Hileman.

For years, the question of what moves the price of Bitcoin every day has eluded enthusiasts, investors and financial engineers of Wall Street who have begun to create futures and rely on the world's best-known private money to facilitate trade. Its anonymous property and its unregulated nature have kept its large engines and agitators largely in the shadows. The size of the reverse movement is of the order of gold versus Brent crude oil futures, where the precious metal tends to rise when the most traded product is sinking

All this does not mean that China will relax its treatment towards cryptocurrencies, to authorize them as legal tender, in competition with the yuan.

Since 2017, Beijing has closed all cryptocurrency exchanges based in China and has prohibited crowdfunding schemes related to cryptocurrencies from targeting local customers. Although the People's Bank of China is looking to launch its own digital currency, this official offer is designed to allow Beijing to have better control of its financial system, challenging the purposes of popular tokens such as Bitcoin to distribute financial power.

Translated version of Article by Todd White, published in Bloomberg.