spot_imgspot_imgspot_img

China’s Recent Move Against Risks May Exert Pressure on Bitcoin Price!

  • The latest measures taken by Beijing, according to an observer, pose a downward risk through the foreign exchange channel using Bitcoin (BTC).
  • China’s measurement index, the Shanghai Composite Index, has fallen to its lowest level since March 2020, with a decrease of over 7%, according to data.
  • When the People’s Bank of China (PBOC) sells US dollars onshore to support the yuan, it has the potential to raise the value of the greenback against majors, as tracked by the dollar index (DXY).

China faces risks due to the continuation of the deflation threat and the stagnation of the real estate market: What will happen now?

Effects of China’s Measures Against Risks

bitcoin-btc

China is experiencing a devaluation of its currency again due to the withdrawal of foreign investors from the country amid the ongoing deflation threat and the stagnation of the real estate market. The latest measures taken by Beijing, according to an observer, pose a downward risk through the foreign exchange channel using Bitcoin (BTC).

The tightly controlled Chinese yuan (CNY) experienced a 1.39% decline against the US dollar, and the offshore CNH version in Hong Kong recorded a 1.25% drop. China’s measurement index, the Shanghai Composite Index, fell to its lowest level since March 2020, with a decrease of over 7%, according to data.

The People’s Bank of China (PBOC) uses a managed floating system that loosely ties the value of CNY to a basket of 24 currencies, allowing the local currency to fluctuate daily by 2% above or below its fixed or reference point.

According to recent reports, on Monday, China’s state-owned banks tightened liquidity in the offshore foreign exchange market in Hong Kong by selling US dollars onshore to support the yuan. The offshore yuan one-week CNH Hong Kong Interbank Offered Rate – an indicator of offshore yuan liquidity conditions – rose to 4.95045%, the highest level since September 26.

Such measures can generally lead to the strengthening of the USD, tighter financial conditions worldwide, and a reduction in investors’ exposure to risky assets like bitcoin and technology stocks. This is because when the PBOC sells US dollars onshore to support the yuan, it has the potential to boost the value of the greenback against majors, as tracked by the dollar index (DXY).

Tightening Yuan Liquidity

It is well-known that Bitcoin has an inverse relationship with the USD. The cryptocurrency’s 50% surge in the fourth quarter of 2023 was largely attributed to optimism around spot ETFs, while it coincided with a 4.5% decline in the dollar index. David Brickell, head of international distribution at FRNT Financial, stated, “Today, it was observed that major state banks were selling dollars and tightening yuan liquidity by curtailing lending to support the yuan. This typically provides feedback where dollars are bought back against other currencies to maintain FX reserve ratios and generally results in the strengthening of the dollar.”

Brickell continued, “China is encouraged to keep BTC limited as a sort of cover for relative currency stability and to prevent capital outflows. Past events when the yuan came under pressure have coincided with periods of underperformance in BTC,” added Brickell. The dollar index has already gained 1.8% this month.

Don't forget to enable notifications for our Twitter account and Telegram channel to stay informed about the latest cryptocurrency news

spot_imgspot_imgspot_imgspot_img

Latest News

BlackRock’s iShares Bitcoin Trust Skyrockets to $10 Billion AUM, Marking Historic ETF Milestone

This article explores the remarkable achievement of BlackRock's iShares Bitcoin Trust (IBIT) reaching $10 billion in assets under management (AUM), reflecting growing institutional interest and trust in cryptocurrency investments.

Bitcoin Futures Open Interest Hits Record High, Signaling Strong Market Sentiment

This article delves into the recent surge in Bitcoin futures open interest, showcasing increased market activity and the implications of speculative buying on price movements.

Bitcoin Enters Bull Market with Predictions of 10-Month ‘Face Melting FOMO,’ Says Analyst PlanB

This article explores the latest Bitcoin bull market forecast by analyst PlanB, the implications of the stock-to-flow model, and the role of new Bitcoin ETFs in shaping investor interest and market dynamics.

Bitcoin Eyes $70,000 Milestone: Bloomberg’s McGlone Predicts Shift from Gold to Crypto

As Bitcoin approaches the $70,000 mark, Bloomberg's Mike McGlone forecasts a pivotal transition in investment from gold to cryptocurrency, signaling a transformative phase in asset allocation.

Can XRP Price Reach $1? Noted Analyst Reveals Prediction!

Ripple's XRP token is trading below $0.60; what will be the next target for the XRP token? Current predictions!
spot_imgspot_imgspot_imgspot_img

PRO Analysis

Ethereum Breaks $3K as Rally Continues: What’s Next for ETH?

This article dives into Ethereum's recent surge past $3,000, analyzing the technical indicators and market dynamics driving its ascent and future prospects.

Will Bitcoin Rise To $50,000? Current BTC Analysis

Bitcoin is trading at $48,400 and may rise to $50,777 if it closes above $48,200. However, caution is advised in the range of $50,777 - $52,000. Corrections are common in the crypto market, so careful consideration is necessary before spot investments.

Where is the Solana Rise Target? Current SOL Analysis!

Solana is trading near the $108 resistance on the 8-hour chart, with a potential target of $111.84 if it surpasses this level. However, caution is advised in the $111.84 - $117.20 resistance range on the 6-hour timeframe.

Medium Term Ethereum Technical Analysis! What Awaits Its Investors?

When examining the medium-term technical chart of Ethereum, strong buying pressure is observed, pushing the price up from the $2139 support to the $2350 region. However, for the price to sustain its upward movement, it needs to surpass the $2407 resistance.

Can Bitcoin Fall To $35,000 Levels? Current BTC Analysis

When examining Bitcoin's 5-day technical chart, the analysis from January 18 is ongoing, indicating a continued downward movement from the $48,189 level. Bitcoin needs to close 5-day candles above the $44,200 resistance to gain momentum for an upward trend. 
Celal Mutlu
Celal Mutluhttps://coinotag.com/
Celal Mutlu is a young Satoshi reflection at the age of 21. His favorite characters are CZ and Vitalik, and he has a great sense of humor. Celal is a keen follower of developments in the world of cryptocurrency and keeps up with the latest news and trends.
spot_imgspot_imgspot_imgspot_img

BlackRock’s iShares Bitcoin Trust Skyrockets to $10 Billion AUM, Marking Historic ETF Milestone

This article explores the remarkable achievement of BlackRock's iShares Bitcoin Trust (IBIT) reaching $10 billion in assets under management (AUM), reflecting growing institutional interest and trust in cryptocurrency investments.

Bitcoin Futures Open Interest Hits Record High, Signaling Strong Market Sentiment

This article delves into the recent surge in Bitcoin futures open interest, showcasing increased market activity and the implications of speculative buying on price movements.

Bitcoin Enters Bull Market with Predictions of 10-Month ‘Face Melting FOMO,’ Says Analyst PlanB

This article explores the latest Bitcoin bull market forecast by analyst PlanB, the implications of the stock-to-flow model, and the role of new Bitcoin ETFs in shaping investor interest and market dynamics.