Bitcoin (BTC) increased by nine percent on Monday, reaching past £11,000 for the first time since mid-July. The cryptocurrency is in the midst of a more than three week high. On Monday, BTC reached a high of $11,940.48 – and had a low of $10,792.55.
The currency opened the day on $10,971.34, and looks like it will close on around $11,800.
So why is Bitcoin rising? Simon Peters, analyst at eToro, told Express.co.uk: “It’s no coincidence bitcoin’s surge over the weekend has coincided with Donald Trump’s announcement of tariffs on $300billion worth of Chinese goods.
“The yuan has fallen against the dollar to levels not seen since the 2008 financial crisis, and Chinese investors are casting around for alternative assets for their wealth.
“Gold, the traditional haven asset, has been a beneficiary of some of this investor uncertainty.
“Yet bitcoin also seems to have served a similar purpose.
“Given that Chinese investors make up a large proportion of crypto investors, there’s a strong possibility some are backing bitcoin’s chances against the yuan.”
For the first time in 11 years, China’s yuan has broken the seven-per-dollar level (8.54 per pound) – creating fears of a potential currency war.
The People’s Bank of China, China’s central bank, set yuan’s daily midpoint at 6.9225 per dollar, the weakest since December last year.
Mr Peters told CNBC that Chinese investors may seek to diversify as the yuan declines.
He said: “Given that Chinese investors make up a large proportion of crypto investors, there’s a strong possibility some are backing bitcoin’s chances against the yuan.”
Bitcoin has seen an upward trajectory in 2019, and in the last three months has doubled in price.
What does the future for bitcoin look like?
Mr Peters told Express.co.uk: “Bitcoin’s status as a haven asset will be made or broken in the coming months, as global market uncertainty is set to increase further.
“Interest rate cuts from the Fed last week and expected cuts from the ECB in the autumn lay bare central bankers’ worries over the state of global economies.
“The pound has taken a significant hit in the past couple of weeks as investors fret about the possibility of a no deal Brexit.
“The fact that these events are concurrent with Bitcoin’s block reward halving means the stars could align for it to become a safe port in a storm.
“If demand for bitcoin soars just as supply falls due to a halving in the block reward, we could see prices increase significantly in the long term.
“In the short term, the next major resistance level we’re keeping an eye on is $14,000 – if we see Bitcoin break through that level, the cryptoasset will be at prices last seen in the market highs of January 2018.”