China, not Facebook, is bitcoin, gold price surges

Bitcoin exploded Wednesday morning to rise 16% to $13,300, while gold rallies back from being down $10 to unchanged.

You see all different explanations for its recent $7,000 rise in June.

The best (or worse) reason is Facebook eyeing a crypto launch called Libra.

If you think FB lending its credibility to cryptocurrencies is bringing in new money to the market, then you are mistaken. I call bull on this.

If Facebook had any influence on the price, then it would be to the downside, either for its lack of privacy controls or because it could be the 800-lbs gorilla in the small crypto space.

If you look at bitcoin sales across the globe, you see most of the buying is coming out of Hong Kong and Shanghai. The Chinese are in the know getting as much money out of yuan or renminbi, which is trading at $0.15 to the dollar.

The worry is that the yuan will be reduced to roughly $0.12 to the dollar on a new peg after the US/China “tariff” talks end. This would amount to a 20% haircut for Chinese so they are hedging the currency cut through diversifying into bitcoin or gold.

This is the prime driver and may be continuing through the summer as the two countries work on a firm date to roll out the new currency policy.

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