Chinese demand drives bitcoin to 10-week high as yuan hits six-year low

The price of web-based digital currency bitcoin jumped to a 10-week high on Tuesday, as worries about a further weakening of the yuan drove increased demand from China.
The Chinese currency hit a six-year low of 6.72 yuan per dollar on Tuesday — the first day of trading following a week-long holiday — after the central bank set a weaker guidance rate, fuelling market expectations that it may allow further depreciation.
State-owned Chinese banks leapt to defend the 6.7 level when it was breached in mid-July but have not been seen buying yuan heavily so far this week, adding to questions over whether China was allowing the currency to resume its descent, after steadying it through much of the summer ahead of major political events.
Bitcoin is a web-based “cryptocurrency” that can move money across the globe quickly and anonymously with no need for a central authority. That makes it attractive to those wanting to get around capital controls, such as China’s.
Around 95 percent of all bitcoin trading is done via Chinese exchanges, according to industry website Coindesk, so any increase in demand from the Asian superpower tends to have a particularly significant impact.

This post was published at Reuters on Oct 11, 2016 |.