The rebound of the RMB caused Bitcoin to plummet by 20%? The latter's long-term prospects are still optimistic

On Thursday (January 5), the price of Bitcoin plummeted nearly 23% after approaching its historical peak in the early trading, hitting an intraday low of $887.47.

According to CoinDesk data, the price of Bitcoin hit a record high of $1,165.89 on November 30, 2013. In early trading on Thursday, it soared to $1,153.02, and then went down all the way, giving the bulls who had been so arrogant recently a wake-up call.

Industry experts said that the rapid surge in Bitcoin prices is bound to cause bubbles, and now is the time to burst them in time. However, in the long run, the investment prospects of Bitcoin are still optimistic for the market.

“Once prices rise rapidly away from the short-term average, market liquidity will decline rapidly, and there will be a lack of selling at high levels, and the bubble will be difficult to sustain,” Peter Smith, CEO of trader Blockchain, said in an email.

He said: "We are now witnessing this effect, and market trading volume has clearly declined. We expect Bitcoin prices to find support in the $850-1,000 range."

One of the important reasons for the recent surge in Bitcoin prices is undoubtedly the depreciation of the RMB. At the same time, the Chinese central bank has strengthened capital control measures, and the outflow of capital from China has been greatly restricted. Against this background, the Chinese Bitcoin market has ushered in a feast.

However, on Thursday, the offshore RMB exchange rate continued to rebound violently, and the offshore USD/RMB exchange rate closed down nearly 1.3% again, and the daily line structure has turned bearish. It is generally believed that the measures taken by the People's Bank of China to tighten liquidity have been effective. As a result, the price of Bitcoin fell sharply.

Dan Collins, CEO of CCO Global, said in an interview: "Thursday's market trend is definitely related to China. When the renminbi appreciates, Bitcoin falls."