One of the more popular justifications for the current bull market floating around the Internet is the growing hostility between China and the USA. Several experts and industry insiders believe Chinese investors are pulling their money out of the Yuan in anticipation of further depreciation, as reported by Forbes on May 15, 2019.
Chinese Investors Exploring Exit Options
It’s no news to anyone that China imposes strict capital controls and makes life miserable for investors seeking to pull their money out of the country. The restrictive capital policy, which has been in place for decades, is a primary reason investors are hesitant to put capital into the state, despite the abundance of opportunities.
Cryptocurrency industry veterans believe that investors in China are attempting to pull out of the Yuan and move into USD-backed stablecoins, Bitcoin, and other altcoins.
As American President Donald Trump finally implemented his long-awaited tariff plan, the Yuan depreciated nearly two percent over the past two weeks. China’s history with “dirty floating,” the practice of manipulating exchange rates beyond the accepted boundaries, has the global market anticipating further currency depreciation by President Xi Jinping to keep Chinese exports competitive despite the tariffs.
Phillipe Bekhazi, CEO of New York-based crypto trading firm XBTO, stated that he has spoken with several traders in Hong Kong who told him the stablecoin business is booming. Reportedly, citizens are trying to avoid the capital restrictions that come with traditional remittance. Asian investors especially prefer the stablecoin Tether (USDT), which has faced widespread criticism and is currently facing charges in New York along with its parent company, iFinex Ltd.
Since China banned exchanges in 2017,