The trade volume of popular digital currency bitcoin hit a record 174.4 million in November, courtesy of Chinese traders that sought haven in the aftermath of the U.S. presidential election.
Chinese investors, concerned over the free falling Chinese yuan, are flying to safety. But many of them are evading government restrictions on directly buying dollars by taking a detour into digital currency, specifically bitcoin. The government has placed a $50,000 cap to the amount of foreign currencies that Chinese residents can buy each year, but that restriction doesn’t apply to bitcoin purchases.
Dan Stanchfield, founder and chief executive officer of bitcoin wallet KeepKey, recently told Reuters that they’ve “been seeing lots of volume from China and also India.”
The recent Chinese stock market jitters has also sent bitcoin prices surging to its highest level since February 2014. Previously, hedge fund manager Kyle Bass, who predicted the 2009 economic crisis, made another prediction that bitcoin may hit $850 soon—or as soon China’s legal tender drops further against the U.S. dollar. This year, the Chinese yuan has already fallen 6 percent against the dollar.
If Bass’s predictions come true, then the demand for safe haven assets like digital currency may drive bitcoin’s value up by as much as $100 in the coming months. After all, traders have been calling bitcoin a “safe haven” asset that shows its strengths as an investment vehicle “in times of macroeconomic uncertainty,” such as recession.
“The pressure for the yuan to decline could be stronger next year as Trump’s policies could lead to a dollar rally and amid concerns about China-U.S. trade relations. The People’s Bank of China can curb high volatility with stronger fixings and intervention, but it won’t do so unless outflows surge, as such measures could add great pressures to the foreign reserves,” said Harrison Hu, RBS Group PLC’s Chief Greater China Economist, according to Coinspeaker.
Current bitcoin price and trade volume
Bitcoin traded at a high $794.32 early Monday morning, with a trade volume of 1.54 million.