Bitcoin May Gain From Yuan Devaluation Amid US-China Trade War

Bitcoin could emerge as a significant beneficiary from the escalating trade conflict between the United States and China. The intensifying tensions have raised concerns about potential economic repercussions, including a possible devaluation of the Chinese yuan. This move, aimed at mitigating the impact of U.S. tariffs, could inadvertently drive Chinese capital into Bitcoin, a trend observed during previous trade tensions.

Arthur Hayes, co-founder of BitMEX, believes that aggressive monetary policy responses, particularly currency devaluations, could trigger increased Bitcoin adoption. In an April 8 post, Hayes suggested that devaluing the Chinese Yuan (CNY) might trigger renewed interest in Bitcoin as investors seek to preserve value outside the traditional financial system. He pointed to historical precedents, referencing similar patterns in 2013 and 2015 when currency devaluations coincided with a surge in Bitcoin adoption. If history repeats itself, Hayes believes 2025 could bring another wave of capital inflows into crypto, driven by Chinese investors looking to escape currency risk.

To support Hayes’ outlook, Bybit CEO Ben Zhou highlighted the relationship between yuan devaluation and Bitcoin demand. He explained that China may respond to US tariffs by weakening the CNY, historically leading to increased capital inflows into Bitcoin. Zhou said, “China will try to lower RMB to counter the tariff, historically, whenever RMB drops, a lot of Chinese capital flow into BTC, bullish for BTC.” Essentially, this strategy would make Chinese exports more attractive globally by reducing their cost, but it could also trigger capital flight, fueling interest in alternative assets like Bitcoin.

The renewed trade war began after US President Donald Trump imposed a 10% tariff on all imports and a higher 34% on Chinese goods. In retaliation, China announced its 34% tariff on American imports, effective April 10. The US has since warned of further penalties—up to 50%—if negotiations stall. China, however, has promised to defend its position firmly. Amid this uncertainty, Hayes suggested that global powers may begin to accumulate neutral assets like Bitcoin. He believes this shift could become a significant price catalyst, possibly pushing Bitcoin’s value to $1 million in the long run.

The People's Bank of China (PBoC) has set its daily fixing above 7.20 for the first time since 2023, signaling a controlled depreciation of the yuan. This shift in currency dynamics could lead to capital flight into Bitcoin, as investors seek to protect their assets from the devaluation. The U.S.–China trade war has intensified with both sides exchanging threats and tariffs. China has vowed retaliation and weakened the yuan, indicating no intention to back down from the escalating conflict. The yuan's depreciation may lead to capital flight into Bitcoin, as analysts suggest that investors are looking for safe havens amidst the uncertainty. The yuan's depreciation could drive Chinese capital into Bitcoin, echoing trends seen during previous trade tensions. This move could be a strategic response to the U.S. tariffs, as China seeks to offset the economic impact through currency manipulation.

The trade conflict has created a volatile environment, with markets on edge due to shifting currency dynamics and erratic headlines. The U.S. dollar has held firm amidst misplaced optimism about China's economic situation, but a massive devaluation of the yuan could be necessary to offset the tariffs effectively. Such a move could easily trigger capital flight into Bitcoin, as investors seek to protect their assets from the devaluation. The yuan's depreciation may lead to capital flight into Bitcoin, as analysts suggest that investors are looking for safe havens amidst the uncertainty.