Bitcoin's price has been relatively stable over the past few months, hovering right around $600.Interestingly, the larger price movements in the digital currency have tracked devaluations in the Chinese currency, the Yuan (CNY).Some have suggested that this relationship indicates that some wealthy Chinese are using Bitcoin as a tool for capital flight and to circumvent China's strict capital controls.Bitcoin has only been around since 2009, and its price hasn't risen to any substantial level until around three years ago - so the data simply doesn't go back far enough to confirm a link statistically.The price of Bitcoin also seems to track its cost of production - since producing Bitcoins consumes a large amount of electricity.It may just be coincidence then that CNY and BTC have followed each other recently.(See also: Can China Staunch Its Capital Hemorrhage?)Bitcoin Price and CNY In the chart below, the price of Bitcoin (in white) tracks more or less the price of the Chinese Yuan (in U.S.

The Chinese government has been systematically devaluing the Yuan lately in order to support its economy and financial markets as its growth has begun to slow down.The graph shows that when these events occur (spikes in the yellow lines), the price of Bitcoin soon follows.bitcoin audiobookSource: Bloomberg This could be due to the fact that many wealthy Chinese are using Bitcoin as a tool for capital flight, getting around capital controls that limit the amount of hard cash that can be exchanged for foreign currency, or that prevents investment in foreign assets.litecoin speedA story by the Financial Times earlier this year reports that regulators have stepped up their efforts to enforce these controls.bitcoin al qaedaChinese residents are permitted to buy up to $50,000 annually, with the quota resetting at the beginning of the calendar year.bitcoin qiwi обмен

(See also: What Bitcoin Regulations Look Like Around The World) Because Bitcoin is an anonymous, digital form of money that exists acrosse\ a distributed, decentralized network of computers it is difficult for regulators to identify outflows of funds via this mechanism, and even hard to enforce its usage.ethereum slowChina has grown to be the world's largest user of Bitcoin, as well as other digital currencies.bitcoin wallet theftOver the past 30 days, 42.5 million Bitcoin have been exchanged for CNY, while only 352,000 Bitcoin have been swapped for U.S.bitcoin usage statsThe Bottom Line Some Chinese may be using Bitcoin as a tool to circumvent capital controls and stave off the negative effects of a devalued Yuan.ethereum march 31

The price of Bitcoin lately does seem to track to a certain extent the dollar price of the Yuan, and it makes sense that Bitcoin could be used as a tool to exceed money exchange limits set by Chinese regulators.If true, the price of Bitcoin may spike once again the next time the CNY is lowered.ethereum march 31See also: The Six Biggest Misconceptions About Bitcoin Want to learn how to invest?Alphaville is completely free.All you have to do is register.Ready to subscribe, View our subscription optionsThe use of Bitcoin as a capital funneling method for Chinese investors is hitting the mainstream news, however, there is already talk of authorities clamping down on it - again.As China’s yuan continues its multi-year low against the dollar, authorities have acted to stem the outflow of value.Investors are finding ever more ingenious ways of getting their capital out of the country - and Bitcoin is becoming the method of choice.

Now, even regional news outlets are quoting sources actively using Bitcoin where other methods are no longer available.Investor: China’s Market Rules ‘Not Fair’ Singapore outlet The Straits Times interviewed Wayne Zhou, CEO of a Shanghainese multinational goods company, who said he is “considering buying gold or the virtual currency... which he can buy in China and sell for foreign currencies overseas.” Zhou continued: "The market rules in China are not fair.Any day, they (the authorities) could roll out some new rules at midnight and you can't even get out.But there will always be those who have gotten wind of it earlier and unwound all their investments ahead of everyone else.” Bitcoin’s increasing popularity will likely only have benefitted from Chinese authorities’ latest ruse to prop up the yuan.Earlier this month, the country’s regulator, the State Administration of Foreign Exchange, lowered the threshold for “vetting” transactions going abroad from $50 mln to $5 mln.

A source told Reuters at the time that such transactions “may not be approved” after inspection.However, all may not be easy for those in the know about crypto.China has long held the record for Bitcoin exchange, even while its legal status has gone through many shifts in the past few years.The yuan’s weakness could be the tipping point for a renewed push to crush access for the lay investor.The Straits Times quotes analysts who are hedging their bets that capital controls will be “further tightened” as markets expect further surges in the outflow of capital.Direct investments topped $146 bln in the first ten months of 2016."The small and medium-sized companies are highly leveraged, and liquidity is needed to keep businesses going,” National Australia Bank’s Gerard Burg said."Given changes in the financial sector, where there is increased interbank lending and more connectivity between the banks and the shadow banking sector, more liquidity is also needed.” Username * First Name Last Name Email * Password * Repeat Password * You registration completed successfully.