Bitcoin and Yuan- Capital Flight to Bitcoin? China’s Trade War Impact on Crypto
Bitcoin and Yuan– According to Arthur Hayes, the founder of BitMEX, China’s response to America’s increasing trade tariffs could result in significant capital flight toward Bitcoin and other cryptocurrencies. Hayes believes that if the Chinese government devalues its currency, the yuan, this will likely trigger Chinese capital to flow into Bitcoin, reigniting the crypto market bull run.
Hayes explained, “If not the Fed [Federal Reserve], then the PBOC [People’s Bank of China] will give us the Yahtzee ingredients.” He refers to the central bank’s actions as a potential catalyst that could reignite the crypto bull market. He further emphasized that the narrative of Chinese capital flight into Bitcoin worked in 2013, 2015, and could repeat itself in 2025.
Ben Zhou, the CEO of Bybit, shares a similar outlook. He argues that when China lowers the yuan to counter tariffs, it often results in a surge in Chinese capital flowing into Bitcoin. Historically, whenever the yuan has dropped, Bitcoin prices have responded positively. For example, in August 2015, when the yuan fell by nearly 2% against the U.S. dollar, Bitcoin experienced increased interest, although the connection between the two remains debated.
Similarly, in August 2019, when the yuan fell below the symbolic 7:1 ratio against the USD, Bitcoin prices also saw a rise. Analysts believe that Chinese investors may have used Bitcoin as a hedge against the depreciation of the yuan during this time.
Wealthy Chinese citizens have long used cryptocurrency as a means of preserving wealth and circumventing government-imposed capital controls. Analysts suggest that currency devaluations harm trust in central banks and their ability to manage the economy, prompting individuals to turn to decentralized alternatives like Bitcoin.
In the context of ongoing trade tensions, with the U.S. president promising additional tariffs and China vowing to retaliate, the stage is set for potential capital flight to Bitcoin as both nations engage in economic battles.
As Hayes and other experts suggest, if this pattern continues, Bitcoin could see a surge as more investors seek refuge in the crypto market amid economic uncertainties.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.
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