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Bitcoin Unaffected By China’s Stock Market Woes
The new year has not been a happy one for China’s shares. The Shanghai Composite fell 6.85% to 3296.66, the Shenzhen Composite declined 8.1 percent and CSI 300 briefly fell 7.02 percent which triggered a circuit breaker (temporary freezing of trading, if the index in question falls by a pre-determined level), CNBC reported.
“Trading was halted at about 1:34 p.m. local time on Monday after the CSI 300 Index dropped 7 percent”, as reported by Bloomberg.
The trading halt in China further led to slump in Asian and European stocks. In Asia, Tokyo’s Nikkei 225 closed down 3.1% while the Hang Seng fell 2.7%. In Europe, Germany's Dax declined 3.2%, France's CAC 40 plummeted 2.5% and London's FTSE 100 declined 2%.
Moreover, the People’s Bank of China on Monday also cut the yuan’s value against the US dollar, making it weaker than 6.5 for the first time in more than four-and-a-half years, as pressure on the currency rises from the country's growth slowdown.
The given circumstances are likely to contribute to an increased effort among investors to diversify their portfolio to include bitcoin. Last year in August, the surprise one-off depreciation of the yuan by the PBoC led to price divergence between USD and CNY exchanges as holders of yuan resorted to bitcoin as a safe haven. China accounts for 80% of the global trading volume of bitcoin.
“There are a growing number of people who feel that bitcoin is a safe haven of sorts, analogous to the role that gold played historically. If this is true, economic turmoil in China could cause speculators and perhaps some businesses to buy more bitcoin in a 'flight to safety.' Bitcoin has some properties that make it attractive during times of economic uncertainty, and uncertainty in Chinese stock markets, foreign exchange rates, and the overall economy could create more demand for bitcoin and buoy prices”, Greg Wolfson of BTCC told Bitcoin Magazine at the time.
BTC/USD did not show any major change so far in the day. It rose from 428.44 levels to 432.43 levels and currently trades at 431.29 levels (at the time of writing).
CryptoCoinsNews reported that exchanges didn’t report a spike in BTC trading. However, it added that a possible increase in trading and price of Bitcoin will be noteworthy as a result of the crashing China’s stock market.