Bitcoin is Surging.Thank the Trade War.
Despite a sudden retreat on Thursday, Bitcoin jumped 12% for the week to $7,100, 40% above the price it was trading for just six weeks ago and near its highest level for the year. One crypto exchange operator thinks it has a lot to do with the looming trade war between China and the U.S.
Harpal Sandhu, chairman of Mint Exchange, said on Monday that the market flow indicates that investors in China have been unloading yuan to move into Bitcoin and other currencies ahead of a trade war. “This is capital flight coming out of China because of trade,” he said. Chinese investors were wise to move out of the currency, which lost value against both the dollar and the yen early last week. Some analysts expect China to devalue the yuan more aggressively if tensions escalate, making exports relatively cheaper.
Mint Exchange is a cryptocurrency clearinghouse that gives traders access to over-the-counter exchanges around the world. Because order flow is sourced from so many exchanges, Sandhu sees where volumes are heaviest. And in the past couple of weeks, “it’s happening during Asian trading hours.”
Daily crypto volume on Mint Exchange tripled in the past two weeks, to $59 million this past Sunday, he said. The selling was so intense that several major exchanges had temporary outages. “These guys can’t handle the volume,” he said. To Sandhu, this indicates that there are many small trades (as opposed to a few big sellers). “Our read is that this is largely retail driven,” he said.
The price jump has brought new energy to a market that lost its oomph as the price of Bitcoin and other digital coins plunged. Who says you can’t win a trade war?