Bitcoin Could Make A Comeback, But Major Moves In Currencies Must Happen First
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(Kitco News) - Bitcoin’s prices have been linked to emerging markets, including the Yuan, and it is unlikely the Chinese currency will move enough to cause investors to flood into bitcoin, this according to Christopher Vecchio, senior currency strategist of DailyFX.com.
“Now, over the past month, the currency with the highest correlation to bitcoin has been the Yuan. The fact that we’ve seen the Chinese Yuan weaken so significantly as these trade wars fears have increased has been that catalyst needed for bitcoin to rally,” Vecchio told Kitco News.
A return to December 2017 highs for bitcoin is unlikely, said Vecchio, as that would imply a Dollar-Yuan rate of past 7, signaling a “world on fire” type of event that necessitates a major escalation of the trade war to a new “realm altogether”.
On the dollar, Vecchio maintains a bullish stance as central banks around the world are about to lower rates, creating a dollar-positive environment.
“It looks like [the ECB] is envisioning a period of time beyond 2020 in which rates are going to stay low, and so that juxtaposition between the dollar’s projected interest rate path led by the Federal Reserve and what the Euro may see by the ECB is leading to this widening out of interest rate differentials in favor of the greenback,” he said.