An economic rule is: supply and demand determine the price. And if you look at the last few months, you can see that Bitcoin's claim was (and is) clearly felt.
Even with the current correction of Bitcoin price of about 20%, the price of Bitcoin has increased by more than 160% this year. This growth is expected to accelerate if central banks continue to devalue their own currencies in the context of the trade conflict.
The increasing and permanent devaluation of national currencies is leading to an increase in inflation. For the inhabitants of a country, it means a loss of purchasing power. In response, more and more people are turning to Bitcoin, increasing demand and pushing the price of Bitcoin up. Let's take a look at the news in China and Japan.
Bitcoin price influenced by central banks and big banks (positive)
The demand and enthusiasm for Bitcoin is greatest in Asia – think of countries like South Korea, Japan, Taiwan, Singapore and China. Thus, trading in the markets is particularly active when the "Asian time zone" does not sleep. Often, the entire day's atmosphere is even influenced by their actions. Take the People's Republic of China as an example.
China is one of the main players in the "BTC trade sphere" – despite Beijing's constant efforts to crack down on bitcoin (mining) in order to better control the financial flows of its own population. However, this project is less successful, said an expert from the Chinese Bitcoin Association.
China and People's Bank of China boost demand for bitcoins
Because, according to his statements, the volume of purchases of Bitcoin in China only during the last quarter increased by 50%. (In the absence of official statistics, this is difficult to verify). However, it is already clear that the price of bitcoin will benefit from such an explosion in demand. The comments of the Chinese media, which called Bitcoin "Safe Haven", also play their part.
According to the expert, the outbreak of the boom in demand was announced the day the People 's Bank of China (PBoC) confirmed that it would introduce its own digital currency.
Another (huge) factor is the devaluation of the Chinese yuan. In Bitcoin article Run in China? The trade war with the US is pushing the Chinese in BTC & Co. I took a detailed position on this and analyzed in particular the USD / CNY exchange rate. You will also discover the impact of a further devaluation of the Chinese yuan on China's economic situation.
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Capital outflows threaten the Chinese economy
The government is clearly concerned about capital outflows and has therefore already taken steps to contain them. For example, there are clear limits to the removal and transportation of money to places outside of China. The PBoC clearly regards cryptocurrencies as a threat to their "own finance government".
In this regard, a chief economist who wishes to remain anonymous but works for a major international bank said:
Only a central bank has the right to print money. they [die chinesische Regierung + Zentralbank] only defends his own monopoly.
As a result, the Chinese government may not be inclined to have Tether, based in Hong Kong, issue a stable currency covered by the Chinese yuan. Not amused, China will also be about the general situation in Hong Kong. Tens of thousands of people are protesting, among other things, for greater independence for China.
Positive regulation in the example of Japan
That things work so differently shows us Japan. The country, which is far from being so autocratic, has a completely different vision of digital assets. Take, for example, the testimony of a senior official of the Bank of Japan, who comments on recent events in China and, in particular, the reaction of the PBoC:
Because they are afraid of capital outflows, China considers each type of financial asset as an adversary. However, we are not afraid of capital outflows because we love the technology hidden in crypto-currencies and are in constant exchange with the technology community. We promote Bitcoin but only do so in a regulated environment.
Thus, some news in the past show that interest in cryptocurrencies and bitcoins in Japan is high. Japanese regulators are also contributing, for example by establishing attractive tax models for cryptocurrencies.
Bitcoin prices and central banks – a conclusion
Central banks are clearly contributing to the price and demand for bitcoins by devaluing their own currencies to boost their economies. The escalation of trade wars only exacerbates these problems, as the associated protectionist measures hinder (global) growth everywhere.
US President Donald Trump has publicly threatened to devalue the dollar in response to Chinese efforts to undermine its trade tariffs. We have also repeatedly reported that more and more Chinese are accumulating Bitcoin in the current circumstances.
Both the European Central Bank and the US Federal Reserve have taken deflationary measures – it is unlikely that monetary policy will move away from this monetary policy in the near future. In other words, we are going through an economic crisis because neither the new reduction nor an appropriate increase in the current level of interest rates would have any positive consequences for the economy. So, what constitutes a real dilemma for the world economy is all the better for Bitcoin. Because such news increases the demand for a bitcoin on the rise – thank the central banks!
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