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Bitcoin Price Forecast: BTC Enjoys a Boost from USD/CNH Price Climb

Bitcoin has bounced 20% since July’s FOMC meeting, which gave rise to an initial jolt of market volatility. The next day, President Trump unexpectedly announced a new tranche of tariffs on China which sparked considerable volatility across the financial world. One area that has been of particular importance - USD/CNH – traded above 7.00 for the first time in the history of the offshore market. In allowing USD/CNH to cross that line, the People’s Bank of China effectively signaled a willingness to enter a currency war.Bitcoin has bounced 20% since July’s FOMC meeting, which gave rise to an initial jolt of market volatility. The next day, President Trump unexpectedly announced a new tranche of tariffs on China which sparked considerable volatility across the financial world. One area that has been of particular importance - USD/CNH – traded above 7.00 for the first time in the history of the offshore market. In allowing USD/CNH to cross that line, the People’s Bank of China effectively signaled a willingness to enter a currency war.

BITCOIN FINDS A BID JUST IN TIME

While that willingness will likely have greater implications for global markets down the road, the immediate boost in USD/CNH has spurred an increasingly positive three-week correlation with Bitcoin – which stands at 0.97 on Wednesday. The rolling one-week correlation is also statistically significant at 0.98. This is not the first time BTCUSD has maintained such a relationship with an emerging market currency as investors look to store, or move, their capital with cryptocurrency instead of their weakening local currency. Past examples include a wounded Turkish Lira working to assist BTCUSD in its 2019 rally.

"Now that the exchange price is relatively calm, it is obvious for futures trading volume to fall.” While market participants are still heavily divided over the digital currency's utility, value and safety, they expect the futures contract to offer a legitimate means for institutions to bet on bitcoin. Some investors even expect the futures will offer markets and easier means to take short positions on the cryptocurrency. The futures are cash-settled contracts based on the auction price of bitcoin in U.S. dollars on the Gemini Exchange, which is owned and operated by virtual currency entrepreneurs Cameron and Tyler Winklevoss.

While the US-China trade war and the USD/CNH spot price remain in flux, Bitcoin’s recent boost arrived just in the nick of time from a technical perspective. Prior to the July FOMC meeting, Bitcoin had bled lower from its highs in June and July and was threatening a break beneath rising trendline support from May. While technicals towed the line until a fundamental breakthrough occurred, that breakthrough is now looking to boost the digital asset above another important technical level.

While the US-China trade war and the USD/CNH spot price remain in flux, Bitcoin’s recent boost arrived just in the nick of time from a technical perspective. Prior to the July FOMC meeting, Bitcoin had bled lower from its highs in June and July and was threatening a break beneath rising trendline support from May. While technicals towed the line until a fundamental breakthrough occurred, that breakthrough is now looking to boost the digital asset above another important technical level.

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