Bitcoin’s return to form continued on Monday thanks to trade tensions between China and the U.S. along with the possibility of the Middle Kingdom easing its stance against cryptocurrencies.

After breaking through $11,000 on Sunday, bitcoin teased $12,000 before dropping to about $11,630 at midnight EDT, up 1% over the last 24 hours.

China was front and center not only in cryptocurrency markets but global equities market as well as it let the renminbi fall to an 11-year low against the U.S. dollar in response to the imposition of additional tariffs on Chinese goods by the Trump administration. In addition, the country halted all purchases of U.S. farm products, causing stocks on markets worldwide to plunge on fears the latest escalation in the trade war will drag down the global economy.

Dropping the price of the renminbi makes exports from China cheaper in terms of other currencies and hence more appealing. Likewise, a lower RMB makes cryptocurrency more appealing to those holding renminbi as it acts as a storage of wealth against further devaluations. In an extreme example, bitcoin became highly popular in Venezuela as the country’s currency crashed, causing the government to ban cryptocurrency exchanges and even arrest bitcoin miners.

Is #Bitcoin breaking out on money flowing out of China?

We are currently seeing a massive rally for the US Dollar verse the Chinese Yuan.

Due to **VERY STRICT** capital restrictions in China, one of the biggest ways to move your money is through Bitcoin.

Big Macro Event Here pic.twitter.com/p1ThvZg2MP

— Jacob Canfield (@JacobCanfield) August 5, 2019

It’s not just Chinese nationals flood into bitcoin either. Tom Lee, head of Fundstrat, told CNBC that cryptocurrency is being seen as a hedge against global risks by investors in many markets.

While Venezuela cracked down on cryptocurrency when its currency was declining, China may be headed in the opposite direction. Despite banning exchanges in 2017, then discussing banning bitcoin mining earlier this year,  Jeremy Allaire, co-founder and chief executive officer of Circle Inc., said he thinks China is now softening its “hardline stance against bitcoin.”

“We have been seeing, from my vantage point, a softening in the Chinese stance towards crypto,” Alliare told CNBC, citing a court case in China last month that legally recognized bitcoin as digital property. In addition, Allaire noted that the state-owned Bank of China started openly discussing bitcoin and cryptocurrencies shortly after the court decision.

A decision to legalize cryptocurrency exchanges within China would certainly be a boost for bitcoin, but that doesn’t stop Chinese investors from buying bitcoin now.

“There is a lot of Chinese national participation in this market,” Allaire said. “There are many large offshore exchanges,” he added, referring to previously mainland Chinese exchanges that switched jurisdictions following the ban to places such as Hong Kong, Taiwan and Singapore.

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