China adopted Hong Kong state security legislation. What does bitcoin have to do with it
The Hong Kong National Security Act was passed by the Standing Committee of the All-China People's Congress (HSPC). The document was signed by President Xi Jinping, the new rules come into force on July 1. Against the adoption of the law that is actively advocated in the US. National Security Adviser to President Robert O'Brien said sanctions would be imposed on Hong Kong and China. This can affect the value of various assets, including cryptocurrencies.
“Washington has its own problems in the country, if they continue to interfere in Beijing's affairs, bitcoin may begin to increase in value with these strained relations between these countries. If the world is covered by the second wave of a pandemic, Bitcoin will become cheaper and not rise in price. It is a problem with many unknowns, so it is pointless to give a forecast for more than a week, explained Vladislav Antonov, an analyst at Alpari IAC.
Hong Kong administration chief Carrie Lam agreed to the region's need for national security legislation, and Chinese authorities warned the United States that the disruption would jeopardize a deal. The new law is designed to prevent a threat to state power, including the prevention of incitement, terrorism, the undermining of power and the involvement of external forces in matters in the administrative region.
A document introduced by the government in May gives mainland authorities good opportunities to limit public speaking and freedom of speech in Hong Kong. It is believed that a new security agency will be created in the city, directly subordinate to Beijing and equipped with broad powers. In the event of conflict, the new law will take precedence over local law.
“I think this bill is already in price, most market players are ready for this, and even if you look at the US index or cryptocurrency, the reaction is simply zero. I'm almost certain that the COVID-19 will go by the wayside, but the US election race will soon fill the first few rows in absolutely every media, says Fedor Anaschenkov, a United Traders analyst.
The fact that the adoption of a new law in China will not affect the cryptocurrency market was also announced by the founder of Cryptoreg.exchange Andrei Podolyan. According to him, relations between China and the United States deteriorate "is not the first day." Perhaps it is a reaction after the United States banned trade on the stock exchanges with major Chinese companies.
But Chinese investors have already used Bitcoin as a defensive asset against the devaluation of the national currency, Bloomberg wrote about this last year. Then the demand for the asset was so great that users paid up to $ 300 per transaction as a bonus.
Then, the sanctions imposed by the United States on North Korea became the cause of the weakening of the yuan. At the end of May this year, analyst Yashu Gola predicted that the situation could happen again, there is the United States will introduce new measures against China after the adoption of the National Security Act in Hong Kong. But now, the risk of the second wave of COVID-19 may also affect the price of bitcoin.
“The market sentiment is changing very quickly. As soon as negative news about the corona virus appears in the media, investors flee to the yen and the dollar in fear of the start of the second wave. If there is silence about the virus, market participants, including traders, buy risky assets, motivate their business to avoid the second wave and the world economy will recover according to the V model, says analyst Vladislav Antonov.
Quotes of bitcoin and RMB mainly had a negative correlation. As the digital currency rose in price, the national currency became cheaper. Therefore, we can assume that if the yuan weakens, the price of the digital coin will increase on the contrary. But at present, the situation is complicated by two factors at the same time: the low volatility of the first cryptocurrency over the past two months and the risks of the second wave of COVID-19. Because of this, the value of an asset can fall sharply.
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