Chinese Investors Buying Up Bitcoin as Yuan Falls

The digital currency allows users to store their assets outside China
Chinese investors looking for a refuge from the weakening yuan are turning to bitcoin.
Total trading in the virtual currency reached 47 million bitcoins last week, the highest-ever level based on data going back to 2011. Prices meanwhile hit a more-than four-month high of $742.46 on Wednesday, according to CoinDesk data.
The vast majority of the action has been taking place in China, the world’s second-largest economy, with bitcoin trading on three Chinese exchanges accounting for 98% of global volume in the past month.
The rise in bitcoin prices and trading volumes has coincided with the renewed weakness in the Chinese yuan. The magnitude of the Chinese currency’s decline – it has fallen 1.4% against the U. S. dollar since Sept. 30 – has taken some Chinese investors by surprise, prompting them to search for stable stores of value like gold or ways to send money offshore that circumvent China’s capital controls.

This post was published at Wall Street Journal on Nov. 4, 2016.