Novum Alpha's Patrick Tan says yuan's slide, coupled with the property market swoon, may spur demand for cryptocurrencies. By godbole17
As a bitcoin propounder would say, the reason bitcoin and other cryptocurrencies were invented – to hedge against fiat currency volatility – is upon us and now is the time to snap up digital assets.
Chinese yuan slipped to 7.2244 per U.S. dollar early Wednesday, the lowest since 2008, taking the year-to-date decline to nearly 14%, according to data sourced from charting platform TradingView. A sudden and sharp devaluation of a fiat currency makes imports costly and often ends up importing inflation into the economy. That, in turn, reduces the monetary unit's purchasing power and weighs over consumer spending, putting downward pressure on the economy.
"It's not just a capital flight that may motivate the Chinese to take up cryptocurrencies against a rapidly sliding yuan, it's the potential collapse of confidence in an asset that most Chinese have only known to go up – real estate," Tan said, adding that real estate forms the bulk of familial and generational wealth in China.
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