Sanctions imposed by US against China are providing a boost to Bitcoin

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As White House National Security Advisor Robert O’Brien warns China with economic sanctions over Hong Kong’s national security law, Bitcoin anticipates global expansion.
According to Naeem Aslam of AvaTrade, the warning could prompt the People’s Bank of China to depreciate the yuan, which would be devastating for all currencies.
In the midst of the stressful geopolitical turmoil, Bitcoin and gold may draw more purchasers.

Bitcoin and the Chinese Yuan used to have a near-perfect negative connection. The cryptocurrency rose in value while the official currency dropped.
At the height of the US-China trade war, the two assets formed a close relationship in mid-2019. According to Bloomberg, investors used Bitcoin as a hedge against the People’s Bank of China’s purposeful devaluation of the yuan. People were willing to pay a $300 premium for the bitcoin because demand was so great.
In mid-2019, there is a correlation between Bitcoin and the Chinese Yuan | Bloomberg is the source of this information.
Now, a year later, as the United States and China engage in a new sort of “cold war,” Bitcoin is expecting a similar market rise.

US Sanctions on China

As White House National Security Advisor Robert O’Brien vowed to slap penalties on China in retribution for their planned Hong Kong national security law, Bitcoin’s bullish bias improved.
“It appears that they are going to take over Hong Kong with this national security law, and if they do… Secretary of State [Mike] Pompeo will very certainly be unable to declare that Hong Kong has a high level of autonomy.
“And there will be sanctions levied on Hong Kong and China if that happens,” O’Brien told NBC.

In the previous five years, demand for Bitcoin has increased in sanctioned countries. Venezuela’s tech-savvy citizens, for example, have turned to cryptocurrencies as a hedge against the country’s astronomically high inflation. Citizens in Iran began utilizing Bitcoin to get around the country’s ban on international banking and to preserve their savings from a dropping Rial.
Meanwhile, according to a 2019 poll by analytics firm Gate Trade, 25% of Iranians make $500 to $3,000 per month via bitcoin-related enterprises.

The Bitcoin War Against Currency

If the United States goes ahead with its plans to impose economic sanctions on China, the PBOC may devalue the yuan. According to Naeem Aslam, chief markets analyst at Avatrade, a weaker yuan will have a ripple effect across all developing market currencies.
“There might be a currency war,” the analyst predicted, with each central bank attempting to depreciate its currency. “With another trade war between the US and China, the renminbi will decline significantly, with the exchange rate hovering around 7 yuan per US dollar.”
The troubling geopolitical situation may drive more ordinary investors to Bitcoin – or even Gold, which acts as a hedge against currency-led inflations. From its mid-March lows, the Bitcoin has already gained more than 120 percent.

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