The price of bitcoin has continuously surged since its initial breakout on October 8, increasing from around US$617 to US$640 in a few days. Experts attribute bitcoin’s recent surge to its rising demand in China, amidst serious devaluation of yuan.
In correlation to bitcoin’s recent surge in value, the Chinese yuan reached its six-year low against the US dollar at 6.6904 per dollar, which Reuters reports is the weakest rate since September 2010.
Based on a comparison chart released by Bloomberg’s Joe Weisenthal, it is fairly evident that the underwhelming performance of the yuan causes substantial impact to the value of bitcoin. Historically, the rising price of bitcoin reflected the decreasing value of the yuan.
On October 11, bitcoin experts presumed a US$650 breakout, as bitcoin reached the US$635 margin. With bitcoin price closely approaching US$645, experts have begun to predict a $700 breakout by the end of October.
When Vinny Lingham, bitcoin OTC market specialist and Civic CEO was asked about the driving factor in the price of bitcoin, Lingham stated that the devaluation of the yuan is pushing the surging value of bitcoin.
The recent devaluation of yuan interestingly was not intervened by the central bank of China, unlike in September when the central authority heavily interfered with the exchange market in an attempt to recover the yuan in the short-term.
If yuan continues to decline throughout October, it will highly likely push a bitcoin price breakout in the upcoming weeks.
More importantly, with the British pound reaching its 31-year low value and the entire European market becoming both financially and economically unstable, a massive breakout for bitcoin is highly imminent.
Image Source: IBTimes