China’s Influence on Bitcoin’s Surprising September Surge

September 27, 2023

By Anjali Kochhar

In a recent analysis, crypto expert Ran Neuner highlighted a significant trend in China that could reshape the global Bitcoin market. Despite predictions of a September decline, Neuner foresaw a potential rise in Bitcoin’s value, and his forecast is proving accurate, with a 4.74% surge.

China’s pivotal role in this unexpected surge is evident. The cost of purchasing a Bitcoin in China stands at a staggering $32,500, much higher than the global average. This price difference has sent ripples through the market, boosting Bitcoin’s overall value.

The surge in open interest in Bitcoin-linked derivatives, combined with the Chinese market’s price gap, signals genuine interest and investment from Chinese buyers. This surge has also revealed an arbitrage opportunity: Chinese buyers acquire Bitcoin at $32,500 and exchange it for USDT, a stablecoin pegged to the U.S. dollar, at a rate of $33,700. This price difference is a driving force behind the surge.

Diving deeper into China’s role, it’s clear that waning confidence in the Chinese yuan and local investment avenues is a significant factor. The depreciation of the yuan, coupled with a struggling stock market and a collapsing property sector, has led to an exodus of investments.

Chinese investors, cautious of local market instability, are looking towards safer foreign options, particularly the robust U.S. stock market. This shift is in stark contrast to China’s declining Shanghai Composite index. The real estate market’s collapse is especially concerning, given that a majority of Chinese citizens have investments in property. This financial pressure is propelling a rush towards more stable assets like Bitcoin.

A noteworthy development is the strength of the U.S. dollar. Historically, a strong dollar signalled a decrease in Bitcoin’s price. However, the current scenario has defied this trend. Even as the dollar remains robust, Bitcoin’s price continues to rise, indicating a shift in market dynamics.

James Van Straten’s insights provide further clarity. When the dollar index (Dixie) stood at its current level of 105, Bitcoin traded at $20,000 in March and $17,000 in Q4 of 2022. This suggests that, despite the stable Dixie, Bitcoin’s value against the dollar consistently rises. In simple terms, Bitcoin’s intrinsic value appears to be strengthening.

This surge in Bitcoin’s intrinsic value is closely tied to the yuan’s depreciation against the dollar, highlighting China’s substantial influence on the cryptocurrency market.

About the author

Anjali Kochhar covers cryptocurrency stories in India as well as globally. Having been in the field of media and journalism for over three years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.

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