Economic sanctions against Chinese traders are likely to weaken the value of the Chinese Yuan. As a result, Bitcoin’s (BTC) value is likely to strengthen. This is according to Yasuo Matsuda, a senior strategist at FXCoin.
COVID-19 Caused a Domestic Recession
Speaking to Cointelegraph Matsuda noted that the Yuan’s depreciation would easily lead more Chinese traders to Bitcoin. Resulting in a powerful bitcoin in 2020. The strategist at the Japanese crypto firm noted how likely it was that bitcoin would gain popularity among Chinese traders. For example, citing economic sanctions against Chinese nationals as the main variable towards the weakening of the Yuan. In particular, economic sanctions are the result of the government ‘s security laws, which are part of curbing the spread of COVID-19.
Bitcoin will, therefore, serve as an escape route for Chinese citizens frustrated by a domestic recession in their economies. Meanwhile, Matsuda explained how the Covid-19 pandemic caused the economy to fall into recession. Create an urge among traders to transfer their liquid assets abroad. In fact, Bitcoin could gain even more popularity if the current legislation imposes economic sanctions on the US.
Chinese Yuan Dropped During 2019 Trade Wars
The Intense 2019 US-China trade wars caused a stir across the Asian economy, resulting in a sharp decline in the Chinese Yuan. The currency bottomed towards it low between May and September last year. The Chinese Yuan is now almost approaching its 2018 values. However, this January, after facing a slight rebound from its falling curve.
However, what incentivizes traders to shift their assets overseas once a recession occurs is because the value is dropping in terms of dollars. Capital Flight Regulations in Beijing have taken strict paths, and therefore Bitcoin seems to be the only way forward. This is why most of the Fintech analysts have referred to Bitcoin as a flight-to-security asset.
According to the Independent.uk, in 2020 Bitcoin became the top-performing asset. Overcoming other assets like Gold and Oil.
