Analyst: Bitcoin All-Time High Likely in ‘World on Fire’ Event – BTC, XRP, Ethereum, Litecoin Forecasts
A global currency strategist says Bitcoin’s 2019 surge is largely due to the escalating trade war between the US and China.
Christopher Vecchio, the senior currency strategist at DailyFX, told Kitco that the Bitcoin bull rally is real and is clearly connected to the status of currencies in emerging markets.
“One thing that we’ve been watching for at least the first five months of 2019, something that wasn’t on our radar until the end of last year, has been the relationship between Bitcoin and emerging market currencies. And the leading currency for some time between September and this past April was the Turkish lira. The rolling correlation just going back to September 1st was something like .78 – very statistically significant.
Now, over the past month, the currency with the highest correlation to Bitcoin has been dollar-yuan. And so the fact that we’ve seen the Chinese yuan weaken so significantly as these trade war fears have increased has been that catalyst needed for Bitcoin to rally. In an environment where the global financial system looks like it is potentially at risk because of the world’s two largest economies going at odds, people may be looking for alternative avenues to find ways to circumvent the capital controls being put in place, ways to move their money around without the Chinese or US governments taking stock of it.”
Vecchio says he believes Bitcoin can match its all-time high of around $20,000 if the trade war continues to escalate to a “world on fire” level, with the yuan-per-dollar ratio going past 7. Right now, the yuan is trading at 6.90 to the dollar.
“I think we need to see a lot more weakness in the yuan and in that event that means dollar-yuan going past 7. Dollar-yuan going past 7 would be a kind of ‘world on fire’ type of event. Chinese policymakers do control their own policy rates, so moving it beyond 7 would be seen as effectively as an escalation of the trade war to a new realm altogether.”
Bitcoin is down 1.59% at $8,543 according to COIN360 at time of publishing. Ethereum is down 1.92% at $261.74 and XRP is up 0.48% at $0.4416.
Technical analysts are looking at a potential pullback for Bitcoin and Ethereum while seeing bullish signs for XRP and mixed results for Litecoin.
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