This graph plots the BTC/USD chart against the USD/CNY chart (I would've used Huobi in place of , but it appears TradingView does not have chart data on Huobi going back more than a few months, and the chart is largely similar anyways.
From about the beginning of 2015, it clearly appears that the BTC price has been correlated to the USD/CNY value. Beginning at the most recent rally from the "cup and handle" low, we can see that correlation become even stronger. The thesis behind this can be explained as such:
1) The dichotomy between the US moving towards raising rates and generally tighter , versus the rest of the developed world continuing to languish in accommodative/easy has led to a surge in the USD driven by this divergence. These effects have been amplified by the aftershocks of the US election and the implications of Trump policy (lowered corporate tax rates --> repatriation of cash, trillion(s) in infrastructure spending)
2) Corresponding devaluation by the Bank of China against the USD, further weakening the purchasing power of the CNY
3) Chinese citizens seeking to circumvent capital controls and move their money into other assets to avoid losing purchasing power as their currency devalues
This theme could explain the surge in prices primarily on Huobi (which has broken out to new highs above those set in July, whereas has not) as the massive domestic Chinese market (over 1bn population) seek out alternative asset classes that provide the level of anonymity and lack of centralization to allow them to effectively circumvent their domestic capital controls.
This basically boils the rally in BTC down to the rally in the USD, and turns the question of "how high can BTC go" to "how strong can the USD get"? My personal view is that the USD still has room to run (although not too much, things may come back down to earth around January when Trump takes office and the market fully begins to digest the implications of his policy), and as long as the USD has room to run, so to does BTC .
Curious to know other peoples' thoughts on the matter.