Is Bitcoin Being Used for Chinese Capital Flight?

Bitcoin‘s price has been relatively stable over the past few months, hovering right around $600. Interestingly, the larger price movements in the digital currency have tracked devaluations in the Chinese currency, the Yuan (CNY). Some have suggested that this relationship indicates that some wealthy Chinese are using Bitcoin as a tool for capital flight and to circumvent China’s strict capital controls. Bitcoin has only been around since 2009, and its price hasn’t risen to any substantial level until around three years ago – so the data simply doesn’t go back far enough to confirm a link statistically. The price of Bitcoin also seems to track its cost of production – since producing Bitcoins consumes a large amount of electricity. It may just be coincidence then that CNY and BTC have followed each other recently. (See also: Can China Staunch Its Capital Hemorrhage?)

Bitcoin Price and CNY

In the chart below, the price of Bitcoin (in white) tracks more or less the price of the Chinese Yuan (in U.S. dollar terms). The Chinese government has been systematically devaluing the Yuan lately in order to support its economy and financial markets as its growth has begun to slow

Read more ... source: TheBitcoinNews