So, I've been following bitcoin for a number of years now and I decided to look at how it plays with the dollar and the Chinese yuan. I'm wondering if someone can help me interpret the graph below. I have some background in physics but not much in economics.
So I understand that the green line ("USD/CNY") is the value of the dollar compared to the yuan in the global foreign exchange market. When it goes up, that means the value of the dollar has gone up for those buying with yuan.
The purple line is "BTC/CNY" divided by "BTC/USD", and here's where I'm interested in your help. I have a couple thoughts:
- The lines both have the same units
- The purple line represents the same thing as the green line EXCEPT that it's mediated by the bitcoin market instead of the global forex market
- The purple line compares the value of bitcoin for buyers with yuan to the value of bitcoin for buyers with dollars; When the purple line is above the green line, bitcoin has a higher value to buyers with yuan than buyers with dollars.
Are those reasonable interpretations? Thanks in advance!