Bitcoin is going bananas on Chinese buyers fleeing the yuan

Bitcoin is going bananas.

The cryptocurrecy trades higher by 6.9% at $1094.69 per coin on Wednesday, bringing its 2017 gain to 15%.

On its first trading day of the new year, bitcoin crossed above the $1,000 mark for the first time since 2013.

While strength over the past few months has been particularly impressive, up 90% since the beginning of September, bitcoin enjoyed a blistering 2016 as it gained 123%, making it the top performing currency for the second year in a row.

Bitcoin’s gains have been buoyed by renewed interest from China, where money is rushing out of the country as its currency, the yuan, continues to weaken. China’s foreign-exchange reserves shrunk by about 8% in 2016 to $3.05 trillion as of November. The outflows have pushed the yuan to its weakest levels against the dollar since 2008.

According to a recent Business Insider Intelligence briefing, citing data from Cryptocompare, “In the first 24 hours of the new year, over 5 million bitcoins were bought in Chinese yuan, equating to $3.8 billion. In contrast, just 53,000 bitcoins were bought in US dollars.”

And things aren’t likely to get better any time soon unless China to takes action to stop the bleeding as the Fed ratcheted up its 2017 rate hike expectations to three from two. If those rate hikes were to happen, an even weaker yuan is likely in the cards, creating an even more beneficial scenario for bitcoin.

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