Bitcoin’s steady growth is more enticing than ever as a “nominated exit plan” as China, the U.S. and Italy prepare to give markets a hard time in December.
Dollar, Yuan, Euro Downside Risks
While Chinese government reactions to Bitcoin helped knock several percentage points off Bitcoin’s value last week, overall traction is not slowing.
Bitcoin is today trading at around $709, heading off the slump attributed to worries of a Chinese crackdown which saw a dip below the $700 barrier.
China’s troubled currency meanwhile continues to lose value, due to what Bloomberg describes as the government’s “struggles to plug loopholes in capital controls.”
“[T]here is wide expectation for the yuan to weaken against the dollar beyond the U.S. presidential election result,” Malayan Banking strategist Fiona Lim told the publication. “So all in all, risks to the yuan really are to the downside.”
Safe Havens Hard To Find
Bitcoin is just one tool Chinese investors are using to exploit these loopholes. For forex traders cashing out yuan into currencies like USD, however, the safe haven may be short-lived.
Beyond the boost or drop in USD depending on Wednesday’s election outcome, economic factors are poised to create further turbulence going into December. Pundits are widely expecting a Federal Reserve rate hike following rising inflation, which it says “is no longer expected to remain weak.”
Across the pond in Europe, meanwhile, another tension of a different kind is brewing. Italy’s referendum, scheduled for December 4, proposes wide-ranging political reforms aimed at increasing stability. Center-left prime minister Matteo Renzi at one point said he would resign if he lost and the country voted “no,” but has since done a U-turn now the “no” camp is ahead in the polls.
The broad implications of a “no” vote in Italy remain uncertain. However, an alternative government may be comprised of considerably more Euro-sceptic parties such as the rival Five Star Movement.
Bitcoin ‘Nominated Exit Plan’
Tension over European Union membership could unsettle markets all over again – especially in the wake of Brexit and the instability the UK pound sterling continues to battle with.
Moreover, while bitcoin is rarely the darling of traditional finance analysts, current turbulence has led to some surprising conclusions from the fiat depths.
“For now, it seems like many have nominated bitcoin as their exit plan if the October surprise dealt by FBI Director James Comey turns into a November market shock,” Bloomberg’s Christopher Langner conceded in a market recap today.
What do you think about the risks posed to fiat investments over the next month? Let us know in the comments section below.
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