Tanya Abrosimova
Independent Analyst
- US Dollar - Chinese Yuan stand-off to make Bitcoin more attractive.
- BTC/USD is sliding down towards psychological support.
The trade war between the US and China has increased the influence of Chinese yuan on the emerging markets - especially in the Asia-Pacific region (APAC).
The correlation between yuan and regional stock markets and currencies reached unprecedented levels in 2019 and the trend is set to continue, as China strives to increase the influence of its economy in global trade to counter the adverse effects of trade conflict with the US.
According to the recent statistic provided by the Bank for International Settlements, the share of emerging-market currencies in daily global transactions rose by 3.5% between 2016 and 2019 with yuan leading the pack.
The situation is a recourse of an inevitable currency war between the Chinese Yuan and the US Dollar that will speed up the global de-dollarization and force greater divergence of the world. According to Dovey Wan, the founding partner of Primitive Ventures and a well-known figure in the crypto Twitter, this situation will help to promote Bitcoin adoption.
The mega currency war between Yuan and Dollar gonna be inevitable, the greater the divergence of the world is, the more vibrant Bitcoin will thrive.
She also added that segregation of fiat would lead to a significant role of meta sovereign money in the long run.
Trade war de-escalation
Meanwhile, the US President Donald Trump and his Chinese counterpart Xi Jinping are expected to sign a comprehensive Phase One deal on January 15, followed by a Phase Two ratification at a later date. The de-escalation of the trade conflict might increase the downside pressure on Bitcoin as they would no longer have an appetite for safe-haven assets.
However, in the long-run, the Chinese push for the regional dominance and actions to step away from dollar dependence might take the conflict to a whole new level and get the community back to digital currencies that are nod dependant on political will.
BTC/USD: technical picture
Bitcoin has resumed the decline on Thursday, January 2, and touched the intraday low of $7,087. The downside momentum has been gaining traction after the price slipped below $7,150 (61.8% Fibo retracement). The psychological support of $7,000 will slow down the sell-off; however, once it is broken, the downside momentum will pick up speed with the next focus on $6,800 ( the lower line of the daily Bollinger Band). It is followed by a December low of $6,532 and a psychological $6,000.
On the upside, the above-mentioned 61.8% Fibo retracement is followed by SMA50 (Simple Moving Average) daily at $7,400 and $8,000 with SMA100 daily locate d on approach to this barrier. A sustainable move above this handle will open up the way towards $8,430 (50% Fibo retracement) and $8,550 (the upper boundary of the descending wedge).
BTC/USD daily chart
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