Last year, Chinese investors used the first cryptocurrency as a protective asset against the devaluation of the yuan after the introduction of US sanctions. Now the situation may be repeated if the second wave of coronavirus does not interfere.

The Hong Kong National Security Act was passed by the Standing Committee of the All-China People's Representative Assembly (HSPC). The document was signed by President Xi Jinping, the new rules will enter into force on July 1. Against the adoption of the law actively advocated in the United States. National Security Advisor to the 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 the affairs of Beijing, then with the strained relations of these countries, bitcoin may begin to rise in value. If the world is covered by the second wave of a pandemic, then Bitcoin will become cheaper, and not rise in price. It’s a task with many unknowns, so it’s pointless to give a forecast for more than a week, ”explained Vladislav Antonov, an analyst with Alpari IAC.

Hong Kong's head of administration, Carrie Lam, agreed with the region’s need for a national security law, while Chinese authorities warned the United States that the interference would jeopardize trade deals. The new law is designed to prevent a threat to state power, including the prevention of incitement, terrorism, undermining power and interference of external forces in the affairs of the administrative region.

A document introduced by the PRC government in May gives mainland authorities ample opportunity to restrict public speaking and freedom of speech in Hong Kong. It is assumed that a new security agency will be created in the city, directly subordinate to Beijing and endowed with broad powers. In the event of a conflict, the new law will take precedence over local law.

“I think that this bill is already in price, most market participants were ready for this, and even if you look at American indices or cryptocurrency, the reaction is simply zero. I’m almost sure that COVID-19 will go by the wayside, but the election race in the USA will very soon fill the first lines of absolutely all media, ”said 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 this is a reaction after the United States banned trading on the stock exchanges of shares of major Chinese companies.

However, 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 USA against the DPRK became the reason for the weakening of the yuan. At the end of May of 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 law on national security in Hong Kong. However, now the risk of the second wave of COVID-19 can also affect the price of bitcoin.

“Market sentiment is changing very quickly. As soon as negative news about the coronavirus appears in the media, investors flee to the yen and the dollar on fears of the start of the second wave. If the virus is silent, then market participants, including traders, buy risky assets, justifying their deals by avoiding the second wave and restoring the global economy according to the V-model, ”said analyst Vladislav Antonov.

Quotations of bitcoin and RMB mainly had a negative correlation. When the digital currency went up, the national currency went down. Therefore, we can assume that if the yuan weakens, the price of the main digital coin, on the contrary, will increase. However, at the moment, the situation is complicated by two factors at once: 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 drop sharply.