Demand for Bitcoin seems to be on the rise again in many countries throughout the world as the global economy shows many signs of self-destruction.
Bitcoin Hits Highest Price Since 2014
As nations engage in different levels of market manipulation and currency controls, savvy investors continue to use Bitcoin as an economic safe haven, driving market values to a new 2016 high early on Tuesday.
According to the Coindesk Bitcoin Price Index, Bitcoin reached a global average price of over $788 USD, but in many markets and currencies Bitcoin trades for much more. According to bitcoinaverage.com, trading in the Chinese Yuan reached a high of just over $800 early on Tuesday.
New markets like India are trading even higher. BTCxIndia.com reports Bitcoin is moving at almost 56,000 Rupees, or over $825 USD each. The British Pound, weakened since the Brexit vote, is also trading at well over $800 USD, peaking at over $820 USD.
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China Driving Global BTC Price to New Highs
The Chinese market controls about 80% of the Bitcoin exchange market and the Yuan currency is exchanged for bitcoin over 95% of the time, according to coinhills.com.
Any problems in the Chinese economy tend to have huge effects on Bitcoin values and it seems that Bitcoin may close 2016 over $800 USD because of how China could react to a meeting this week in the United States.
The Federal Reserve will hold a two-day meeting, starting today, to discuss an interest rate increase. Chairwoman Janet Yellen has stated to the Congress of the United States that a rate increase is expected this month; and the conclusion of this meeting before a Christmas vacation begins, is the most likely time for this to occur. The Federal Reserve characterizes the U.S. economy as a slow and steady improvement, worthy of a small increase.
Fed Rate Hike Will Attract Chinese Investors
If rates increase this week, this will most likely attract Chinese investors to the market, and pull capital out of the Yuan. China has many capital controls to prevent “capital flight” out of the country through traditional economic means. This is where Bitcoin has become a valuable commodity, particularly in China. China has devalued their currency several times this year, driving Bitcoin values up over 75% in 2016. The two seem to be directly correlated.
China has met with banking interest Citibank and Deloitte earlier this year on the creation of a national digital currency “as soon as possible,” primarily to create a closed-loop economic network where divestment from the Chinese economic system will become near impossible.
This is the downside to national digital currencies, and the banning of cash in many markets. This leads to the inability of citizens to freely move money out of manipulated or declining markets to growing markets, as national governments and banks seek to expand control.
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