We got an early hint of what the PBOC would do tonight on Friday and Saturday, when as we reported, an unprecedented volume burst of bitcoin buying out of China, sent the digital currency soaring to the highest level since 2014.

To be sure, we had expected sailing would not be smooth for the FX market, when on Friday afternoon, after Yellen's' unexpectedly hawkish comments at Harvard, which sent the USD surging, we predicted a stormy sea for the Monday.

That is precisely what happened when moments ago the PBOC set the official exchange rate of the onshore Yuan lower by nearly 0.5%, from 6.5490 to 6.5794, the lowest fixing in more than 5 years, or February 2011.

Which brings us to a post we wrote last Wednesday, when according to Daiwa, "Round Two Of China Capital Outflows Is About To Begin." The highlights:

As Kevin Lai, HK-based chief economist of Asia ex-Japan at Daiwa Capital Markets writes in note released overnight, round two of China capital outflows is about to begin, if second half last year was considered the first round. This is what he believes will happen next:

• China’s FX reserves may fall below $2t in about a year
• Downward pressure on FX reserves is most likely to be underestimated as short-term speculative flows are far more ready to leave than real flows
• Based on estimates, about 49% of PBOC’s FX reserves are made up of flows which are speculative and short-term in nature
• Expects decline in FX reserves to be more rapid in next 24 months at least
• Look for further $500b decline to $2.7t by end-2016 and a further $900b decline to $1.7t by end-2017
• If companies, especially SOEs, face trouble paying back creditors, central government would bail them out
• Massive bailouts would require government’s monetary policy to turn a lot more aggressive, putting more pressure on yuan
• Policymakers would have to seriously think about letting CNY slide gradually to a better equilibrium level

His conclusion: the USD/CNY will hit 7.50 by end-2016, some 15% higher than where it is now.

Then again, also today Goldman chimed in with a warning that "the end of a temporary sweet spot that China enjoyed with its exchange rate, strength versus the dollar and weakness against trading partners, will spur renewed capital outflows."

Since Goldman has become the "Dennis Gartman" of investment banks, this "warning" may just be the confirmation that ongoing Chinese devaluation will not spook FX markets.

On the other hand, purely statistically, it is about time Goldman got something right, and if this is it, it means that the Fed's June/July rate hike is about to be derailed, for the reasons laid out previously why with the domestic economy no longer a factor, the only thing influencing the Fed is China, and whether or not EM currencies are turmoiling.

For the answer keep an eye on the offshore Yuan: if the selling and shorting resumes in earnest without an intervention by the PBOC, the events from August and January are about to deja vu themselves, all over again.

And, of course, bitcoin. If the Chinese, who know the local financial situtation better than anyone, are openly rushing into the "safety" of a digital currency to avoid imminent devaluation, then we have our answer.

For now, the local commodity markets are displeased as China’s Iron-Ore futures slide to three month low, lowest since Feb. 22; now down 2.5% at 336.0 yuan/MT, while that other China carry currency, the AUDUSD, is down a comparable to the CNY 0.4%, to 0.7151, and is fast approaching a two month low.