Bitcoin suddenly soared this week, with the bitcoin price rising more than 20% in the last seven daysand jumping over $500 per bitcoin in a matter of minutes last night, only to fall back again.
The abrupt bitcoin price rally was largely put down to the escalating U.S. China trade war that’s being stoked by president Donald Trump and yesterday caused China’s yuan currency to weaken to its lowest point in more than a decade, prompting Trump to label Beijing a currency manipulator—but new data suggests there could be more to the latest bitcoin bull run.
Many cryptocurrency experts and analysts were quick to suggest that bitcoin’s rise in tandem with the fall in the yuan means it’s becoming a safe haven asset, despite its extreme volatility and no one being able to accurately predict what bitcoin will do next.
However, it would appear the bitcoin price suddenly soared last night before China announced an increase to the yuan’s reference rate, with analysis of trade volume data by The Block, a bitcoin and cryptocurrency industry website, finding the catalyst was unusually high bitcoin volume on Binance, the world’s largest bitcoin and crypto exchange.
Bitcoin, despite being the most widely-traded cryptocurrency with volumes into the billions of dollars every day, still struggles with wild price swings due to so-called market whales moving large volumes of bitcoin at above or below the current market value.
When this happens it can cause the market to suddenly and unexpected move in one direction, often to soon return to where it was trading previously.
Some closely-watched bitcoin and crypto analysts were unconvinced the rapid rise in the bitcoin price was solely due to the falling yuan.
“Some people have gone so far as to say that the rally we had in bitcoin is a direct result of the falling yuan,” Mati Greenspan, senior market analyst at brokerage eToro, wrote in a note to clients.
“Due to the anonymous nature of bitcoin, it’s extremely difficult to tell exactly where the demand is coming from. The supply factors, of course, have not changed by much.”
Meanwhile, there are a number of other triggers that could have pushed the bitcoin price higher over the short term.
Over the weekend, litecoin, the fourth-largest cryptocurrency by market capitalization, halved its block reward for miners, reducing the number of litecoin tokens miners receive from 25 to 12.5.
These so-called halvening events have come to be seen as a positive for cryptocurrency prices as they put a squeeze on demand, with litecoin up some 300% over the first half of this year.
Bitcoin itself is due to undergo a halvening in May 2020, where the bitcoin reward to miners will fall to 6.25, from 12.5 currently.
Elsewhere, it is looking more likely the U.K. could leave the European Union without a trade agreement in place come October 31, its scheduled date to formerly quit the bloc, putting significant pressure on the pound and sending it to below $1.21 for the first time since January 2017.
“Of course, [the falling yuan] is one possible explanation, but so is Brexit for that matter,” added Greenspan. “The possibility of a no-deal Brexit could very well have people hedging themselves against the potential of another large leg down for the pound sterling.”
U.S. retail giant Walmart is also reportedly looking to develop its own cryptocurrency, with some speculating that the one-time world’s largest retailer could be looking to compete with Facebook’s beleaguered libra project—something that many believe to be behind bitcoin’s rally so far this year.