Global Bitcoin Trading Skyrockets, Thanks to ChinaPublished December 20, 2016 by Lee R
The driving forces are devaluation of the Yuan and optimism for the US dollar post-election results.
The Chinese have found a great use for Bitcoin, and they are throwing their liquidity behind it full force.
Bitcoinity reports that trading totals jumped 50% from October to November to reach a record 174.7 million Bitcoins that changed hands. In besting the previous volume record from March 2016 of 148.6 million, the total value of November trading is staggering: $137 billion.
The ambitious Chinese entry into the cryptocurrency has emerged as a strategy for shifting assets into dollars, of all things. In fact, RBS Group PLC’s Chief Greater China Economist Harrison Hu indicated to Coinspeaker that Chinese investors are currently attracted to the dollar because incoming Trump Administration policies have the potential to increase dollar value while discouraging direct China-US trade.
Yuan Drop Formula
With the Chinese Yuan showing a 6% drop this year against the U.S. dollar and remaining weak since Donald Trump's Presidential election victory Nov. 8, the Chinese have taken to working around domestic trading restrictions against the direct purchase of dollars with a flurry of Bitcoin buying activity beginning just last month.
As unregulated, Bitcoin emerged as an appealing option for Chinese foreign currency investors who are legally capped per annum at a ceiling of $50,000 worth of foreign currency purchases per year.
Bitcoin’s Financial Utility
Since 2013, Bitcoin has emerged as a sort of digital economic insurance, with investors utilizing the alternative to protect against fluctuations in national currencies across financial markets
China’s Summary Involvement
China has three Bitcoin exchanges, responsible for a whopping 90% of global Bitcoin trading volume. Chinese Bitcoin investment first began rising after the August 2015 government devaluation of the Chinese Yuan.
Additional Drivers of Growth
The November spike is further attributed to increases in activity by Americans and European investors pursuing a haven from the volatility of the foreign exchange market since the U.S. presidential election, against which Bitcoin has held firm, jumping in value by 10% to $780. Bitcoin wallet Keepkey founder and chief executive officer Dan Stanchfield indicated to Reuters that the country of India is also contributing to trading volume.
Traders will be able to continue to rely on Bitcoin as a “safe haven” asset in times of what leading hedge fund manager Kyle Bass calls of “macroeconomic uncertainty.”