The Chinese yuan dropped to 11-year lows against the dollar today, and the S&P 500 tumbled 2.7%, however, Bitcoin rose 7% to top $11,700.
The rise continues Bitcoin’s recent surge after being stranded around $4,000 for the first three months of the year.
It’s now seen by some market observers as a hedge against monetary policy and the U.S. dollar. By that logic, the Fed’s shift to dovish monetary policy has boosted Bitcoin.
Monday’s rise in Bitcoin can be notable in light of the yuan’s fall. Given China’s slowing growth and currency that, even earlier than Monday’s precipitous drop, has broadly been on the drop for a number of years, it could be comparatively normal for capital to be leaving the nation. However, the Chinese authorities have put in place capital controls and policies that favor domestic investment by corporations rather than overseas asset acquisitions.
What these policies and controls can’t change are the economic fundamentals that make it fascinating for the rich Chinese to get a minimum of some of their money out of the country. And Bitcoin, even after the Chinese authorities cracked down on it, is a way for them to do it.
Certainly, one of many early-use cases for Bitcoin was to safeguard personal wealth from authorities restrictions. And so a surge in yuan selling and Bitcoin buying might assist explain the currency’s fall past the seven-to-one mark against the U.S. dollar that many market observers had long felt was the Chinese authorities’ unofficial line within the sand.