Is the spectacular rise experienced by Bitcoin due to massive purchases by Chinese citizens? To answer this question, José Luis Cava first looks at the behavior of the yield of the 10-year Chinese bond, which has pierced the support of the 2% zone and is in free fall.
The expert highlights that the Financial Times published an article saying that the yield on the 10-year Chinese bond had breached 2%. Now, the Chinese 30-year bond has also broken the support of the 2% zone. “This means that Chinese economy remains weakand that the Chinese, with the liquidity and savings they have, are buying like crazy and are seeking refuge in Chinese bonds. But “They have a great excess of liquidity.”
It also looks at the behavior of the yuan against the dollar, which since March 2022 it has been in a clear downward trend. “There is support in the 0.1373 area that has been touched several times. What would happen if that support is punctured?”
Finally, it also focuses on the behavior of the yen against the yuan. “The yen is depreciating against the yuan. This means that “Most likely, the Chinese economic authorities will have to devalue the yuan.”
Furthermore, he warns, If Trump finally chooses to increase tariffs on China, China will respond by devaluing the yuan. “Therefore, we find that a very likely scenario is that China devalues the yuan.”
This is why, the analyst comments, many people, anticipating this fact, “are withdrawing their capital from China, in such a way that “China is experiencing capital flight.”. Currency outflows, he continues, have skyrocketed, and part of these currency outflows are being allocated to the purchase of Bitcoin by the Chinese middle class and upper class.
If this trend continues to accentuate, it is most likely that the price of Bitcoin will continue to rise, and we will see it beginning of next year around $125,000. “The last time China officially devalued its currency it did so in 2015, and the price of Bitcoin skyrocketed.”