Bitcoin Rebounds 10% as Yuan Weakens, Trade Tensions Cap Rally

Bitcoin (BTC) experienced a rebound as traders identified a weakening yuan in China, which could potentially drive capital inflows into Bitcoin as a hedge. However, the ongoing trade tensions between the United States and China have capped Bitcoin's rally, preventing it from surpassing the $80,000 mark.

On April 8, Bitcoin's price volatility cooled while traditional stock markets, such as the S&P 500 and Nasdaq Composite Index, saw gains of up to 4.3% in the early hours of trading. This rebound in stocks alleviated fears of a significant market crash, similar to the 1987 "Black Monday" event. However, the unresolved trade tariffs between the US and China remained a concern for traders, who closely monitored the escalating tensions.

US President Donald Trump's comments on the trade war added to the uncertainty. In a post on Truth Social, Trump stated that China was eager to make a deal but did not know how to initiate it. He also mentioned that the US was waiting for China's call, further highlighting the stalemate in negotiations.

Bitcoin advocates saw the devaluation of the yuan as a potential catalyst for capital flight from China, which could flow into Bitcoin as a hedge. Arthur Hayes, the former CEO of a crypto exchange, suggested that either the People’s Bank of China (PBoC) or the US Federal Reserve would ultimately provide the fuel for a Bitcoin price rally. He argued that the devaluation of the yuan could lead to a narrative of Chinese capital flight into Bitcoin, similar to past events in 2013 and 2015.

Meanwhile, the Federal Reserve could boost Bitcoin and other risk assets by lowering interest rates to stimulate economic growth. According to the forecast of an economic research director, if the economy slows down, the Fed would be inclined to cut rates even with elevated inflation. The firm expected 75 basis points of rate cuts in 2025, with markets betting on the first cut at the Fed’s June meeting.

Despite the global market turmoil, Bitcoin's price action remained relatively stable on shorter timeframes, with traders focusing on key levels such as the 0.382 Fibonacci retracement level, currently near $73,500. This level is seen as crucial support in a bull market, and as long as Bitcoin closes above it, the uptrend remains intact. Other important trend lines include the 200-day simple moving average (SMA), which was lost when Bitcoin first fell below $82,000.

In summary, while the weakening yuan in China presents a potential opportunity for Bitcoin to rebound, the ongoing trade tensions between the US and China have capped its rally. Traders are closely monitoring key levels and the actions of central banks, which could provide further fuel for a Bitcoin price rally. However, the unresolved trade issues and potential economic slowdown remain significant challenges for the cryptocurrency market.