Friday, February 28, 2020

Bitcoin Rate Plummets After Surging To A New High

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The value of virtual currency Bitcoin is bouncing around trying to find a new level after hitting a new high.

Over the past two weeks, the currency exchange rate climbed a massive 40% to hit a new peak of $1,140.

Then, the value fell away spectacularly by a fifth in just one day and slumped to as low as $881.

Bitcoin has steadied over the past day or two and is now trading at $886.

Market analysts have pointed out that Bitcoin and the Chinese yuan seem to have a linked rate – as one rises the other falls and the reverse.

Link with the Chinese yuan

In recent days, the yuan has put on value as the Chinese government has taken measures to stabilise the rate.

Many Bitcoin investors choose to dip out of world currencies such as the US dollar, pound and yuan in favour of the virtual money which is outside the control of a central bank and any regulator.

Bitcoin and other virtual systems are the only true international currencies, because they trade without borders and have a global rate rather than one set against a basket of other major currencies.

This allows investors to avoid capital controls and to hedge against devaluation.

The link between the yuan and Bitcoin is sparking interest.

China is a Bitcoin hub

Many see the interaction as a result of Chinese investors switching in and out of the yuan into the online currency.

Bitcoin trading figures seem to show that more than 90% of the virtual currency’s transactions take place in China.

Critics suggest Chinese Bitcoin exchanges overstate their positions to manipulate the virtual currency rate and to encourage speculation.

“Given that the yuan’s weakness over recent months seemed to correlate with bitcoin’s strength more than any other currency, it’s no surprise that bitcoin traders have reacted the way they have due to the yuan’s sudden strength,” said Paul Gordon, co-founder of Quantave, a firm easing access to virtual currencies for investors.

The general opinion is the Bitcoin rate fell due to speculators taking their profits on the trade and that the exchange rate will settle back in time.

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