Bitcoin’s price has seen a dramatic resurgence of bullish support over 2019, which has allowed it to decouple away from a vast majority of traditional financial markets. But when we compare its performance to the Offshore RMB Futures market, however, we can see a striking resemblance between the two trends. Let’s take a look.
What is the Offshore Renminbi Market Exactly?
Renminbi (RMB) in Mandarin translates to ‘the people’s currency’, and has been officially recognized as the currency of the People’s Bank of China (PBoC) since 1948. The Chinese Yuan (CNY) is actually the unit of account for RMB and is not its own separate currency.
The Offshore Renminbi (RMB) market itself is a non-mainland China exchange setup originally in Hong Kong to facilitate extraterritorial trade with foreign countries. Since its inception 2003, three additional offshore RMB markets have cropped up in London, Singapore, and Taiwan.
But what’s the point? Well, by having a detached offshore market, China is able to keep its nation’s capital separate from foreign investments. This is important because not only does it safeguard the Chinese economy from recession if the world trade markets decline, but it also allows them to expand the reach of their currency to the global market.
Bitcoin vs. Offshore RMB Futures Performance
Looking at the chart above, we can see the price performance of both Bitcoin (BTC) and the offshore RMB futures market over the last 8 months (blue and red lines respectively).
What’s surprising here, is that we can see a very clear correlation between the two trends despite both financial products – if you can even class Bitcoin as a financial ‘product’ – operating in two entirely different spheres.