Bitcoin's Geopolitical Valuation: How the China-US Crypto Dispute Reshapes Strategic Investment Narratives

In the evolving landscape of global finance, Bitcoin has transcended its origins as a speculative asset to emerge as a geopolitical tool. The U.S.-China rivalry over cryptocurrency regulation and digital sovereignty is reshaping Bitcoin's valuation dynamics, with reduced circulating supply and institutional adoption reinforcing its role as a strategic reserve asset. This analysis explores how policy divergence between Washington and Beijing is driving Bitcoin's long-term value proposition.

The U.S.-China Crypto Policy Divide: A Battle for Financial Supremacy

The U.S. and China have adopted diametrically opposed approaches to cryptocurrency, reflecting their broader geopolitical competition. In 2025, the U.S. Congress passed the GENIUS Act and CLARITY Act, establishing a dual federal-state regulatory framework for stablecoins and clarifying asset classifications, as the China-US Focus article explains. These measures aim to solidify the U.S. dollar's dominance in global payments by promoting dollar-backed stablecoins while explicitly banning a Federal Reserve-issued CBDC under the Anti-CBDC Act, as the China-US Focus article explains.

Conversely, China has accelerated its digital yuan (e-CNY) initiative, conducting cross-border trials with Hong Kong and the UAE under the mBridge project, as the China-US Focus article reports. By mid-2025, the e-CNY had become a cornerstone of Beijing's strategy to internationalize the yuan, particularly in Belt and Road Initiative (BRI) partner nations. Meanwhile, Hong Kong's licensing regime for virtual asset trading platforms has created a regulatory sandbox, allowing China to test crypto innovations without relaxing mainland bans, as the China-US Focus article reports.

This policy divergence has created a bifurcated global financial ecosystem. The U.S. is leveraging stablecoins to reinforce dollar hegemony, while China is using the e-CNY to challenge it. Bitcoin, as a decentralized alternative to both systems, sits at the intersection of this rivalry.

Supply Dynamics: Halving, Ancient Supply, and Geopolitical Scarcity

Bitcoin's supply mechanics are inherently tied to its valuation as a geopolitical asset. The 2024 halving event, as the Investopedia article explains, reduced the block reward to 3.125 BTC, decreasing the rate at which new coins enter circulation. This scarcity-driven model has been amplified by the rise of "ancient supply"-Bitcoin not moved for over a decade-which now accounts for 17% of the total supply, as the Fidelity article notes.

As of June 2025, ancient supply holdings were valued at over $360 billion, reflecting long-term investor conviction, as the Fidelity article notes. This trend is critical: as geopolitical tensions between the U.S. and China escalate, Bitcoin's fixed supply becomes a hedge against currency devaluation and capital controls. For instance, during the October 2025 U.S.-China trade war, Bitcoin's price dropped 3.7% amid risk-averse sentiment, but its ancient supply remained stable, underscoring its role as a store of value, as the Economies article reports.

Institutional Adoption: From Speculation to Strategic Allocation

Geopolitical uncertainty has driven institutional adoption of Bitcoin as a macro hedge. In Q3 2025, JPMorgan increased its Bitcoin holdings via BlackRock's iShares Bitcoin Trust by 64%, as the Bitget article reports, while MicroStrategy's corporate reserves surpassed $70 billion in BTC, as the Bitget article reports. These moves reflect a shift from speculative trading to strategic allocation, particularly as trade tensions between the U.S. and China disrupt traditional safe-haven assets like gold.

The CLARITY for Payment Stablecoins Act, currently under Senate review, further legitimizes Bitcoin's role in institutional portfolios by clarifying regulatory oversight, as the CryptoFront article notes. If passed, the bill would assign Bitcoin to the CFTC's jurisdiction, reducing regulatory ambiguity and encouraging broader adoption.

Geopolitical Risks and Bitcoin's Future Valuation

While Bitcoin's supply constraints and institutional adoption bolster its long-term value, geopolitical risks remain. The alleged $13 billion Bitcoin hack by the U.S. government, as reported by China's National Computer Virus Emergency Response Center, highlights how state-level cyber operations can destabilize market confidence, as the Bloomberg article reports. However, such incidents also underscore Bitcoin's potential as a tool for de-dollarization. In a prolonged trade war, Bitcoin could transition from a high-beta asset to an alternative reserve, particularly in markets wary of U.S. sanctions or Chinese capital controls, as the CryptoSlate article notes.

Conclusion: Bitcoin as a Geopolitical Macroeconomic Asset

The U.S.-China crypto dispute is not merely a regulatory contest-it is a battle for the future of global finance. Bitcoin's fixed supply, combined with its growing institutional adoption and role as a hedge against geopolitical risk, positions it as a unique asset class. As both nations vie for digital sovereignty, Bitcoin's valuation will increasingly reflect its ability to navigate-and profit from-this geopolitical chessboard.