Bitcoin rose to an almost three-month high amid a surge in volume as the yuan extended a six-year low, bolstering Chinese demand for alternative assets. The cryptocurrency jumped as much as 4 percent from Friday to $655.50, the highest since July 29, according to data compiled by Bloomberg. Trading volume climbed to an almost seven-month high of 5.5 million bitcoin on Sunday, data on Bitcoinity.org showed. Bitcoin’s gains are coinciding with a new bout of currency weakness in China, which accounts for about 90 percent of trading. The digital asset allows Chinese people, who face capital controls that limit the amount of cash they can move abroad, to invest in another currency. Bitcoin’s value is now close to recovering from a plunge in early August that was triggered by the hacking of Hong Kong-based exchange Bitfinex. “As the yuan enters a path of depreciation, investors will consider investing in assets that can preserve value and hedge risks,” said Zhu Jiawei, Beijing-based chief operating officer at Huobi, one of the largest Chinese bitcoin exchanges. The yuan’s declines accelerated this month as the dollar surged amid mounting expectations for a U.S. interest-rate increase by year-end. China has made it harder to take money overseas since August 2015’s devaluation as it sought to stem a vicious cycle where outflows fueled further depreciation. Bitcoin skyrocketed 80 percent from the end of 2015 to reach a 2 1/2-year high of $777.01 on June 17 amid faster yuan declines and expectations for a fall in bitcoin supply in July. Bitcoin was trading at 4,488.6 yuan on Monday on Huobi, amounting to a premium of about 2 percent compared with its dollar price. The gap may widen further as stricter capital controls have made it harder for traders to arbitrage the difference, said Arthur Hayes, Hong Kong-based founder of bitcoin exchange BitMEX. He expects bitcoin to strengthen to $1,000 by January as the yuan falls to 7 against the greenback, he said. China’s exchange rate dropped 0.1 percent Monday to 6.7723. “The continued devaluation of the Chinese yuan is what’s driving traders at the margin to buy bitcoin,” Hayes said. Before it’s here, it’s on the Bloomberg Terminal. LEARN MORE