Bitcoin (BitfinexUSD) entered an eighth consecutive day of gains on Tuesday, rallying above the $12,000 level after a weakening Chinese yuan triggered chaos in the markets on Monday. The People’s Bank of China (PBOC) allowed its currency to weaken past the key level of 7 yuan to the American dollar for the first time in more than a decade.
The PBOC move came after US President Donald Trump announced 10% tariffs on the remaining $300 billion of Chinese imports. Understood to be retaliatory, the PBOC explicitly linked the yuan depreciation to the trade war. The PBOC website stated that the losses in the yuan were largely due to trade protectionism and tariffs on Chinese goods.
President Trump reacted by accusing China of manipulating its currency. He tweeted:
China dropped the price of their currency to almost a historic low. It’s called “currency manipulation.” Are you listening Federal Reserve? This is a major violation which will greatly weaken China over time!
The news heightened fears over the China-U.S. trade war and global equity markets sold off sharply on the news. The Dow ended Monday with a loss of 767 points.
The world’s largest cryptocurrency by market cap rallied to its highest levels since July 10 on Tuesday before giving up some of its gains.
The strong performance as stocks fall has given rise to increasing discussions of Bitcoin as a hedging instrument or even as a safe haven in times of geopolitical instability.
Meanwhile, the traditional safe-haven asset gold reached a fresh 6-year high against the US dollar and reached a record high against the British pound and the Canadian and the Australian dollars, before surrendering some of its gains.
