TLDR
China set the yuan fix beyond the key 7.2 level, likely responding to US tariffs
BitMEX founder Arthur Hayes predicts this could trigger capital flight to Bitcoin
Historical patterns from 2013, 2015, and 2019 show Bitcoin gains during yuan depreciation
Bybit CEO Ben Zhou notes Chinese capital typically flows to BTC when the yuan drops
China’s strict crypto regulations may present obstacles for local traders seeking to diversify
China has eased its grip on the yuan, allowing it to depreciate beyond a key level in what appears to be a response to renewed US tariffs. This move has crypto analysts drawing parallels to similar events from the past decade when Bitcoin benefited from Chinese capital seeking refuge from currency devaluation.
On Tuesday, the People’s Bank of China (PBOC) set the daily yuan fix at 7.2038 per dollar, the weakest since September. This level has long been considered a “harder line in the sand” for the central bank. While the USD/CNY pair has traded above this level a few times since 2022, it has never established a foothold there.
The move signals a shift to managed depreciation of the yuan. This strategy helps keep China’s exports cheaper and competitive, potentially offsetting the negative impact of new US tariffs on Chinese goods.
Historical Patterns Suggest Bitcoin Boost
Arthur Hayes, founder of BitMEX, believes this currency devaluation could provide the “Yahtzee ingredients” needed to resume the crypto market bull run. “If not the Fed, then the PBOC will give us the Yahtzee ingredients,” Hayes stated on April 8, referring to the catalyst needed for Bitcoin’s price surge.
Hayes pointed out that this narrative “worked in 2013, 2015, and can work in 2025.” His view is that Chinese capital flight will flow into Bitcoin as a hedge against yuan depreciation.
Ben Zhou, co-founder and CEO of Bybit, shared a similar perspective. He noted that China will likely try to lower the yuan to counter the tariff, adding that “historically, whenever RMB drops, a lot of Chinese capital flows into BTC,” which he considers bullish for Bitcoin.
Past events support these claims. When China devalued the yuan by nearly 2% against the US dollar in August 2015, marking the largest single-day drop in decades, Bitcoin saw increased interest. Similarly, when the yuan fell below the symbolic 7:1 ratio against the USD in August 2019, Bitcoin experienced price increases in the same timeframe.
Wealthy Chinese Seeking Safe Havens
Analysts suggest wealthy Chinese citizens may have used crypto in the past to preserve their wealth, move it beyond government reach, and avoid capital controls within the country.
Currency devaluations can damage trust in central banks and government financial management. This often pushes people toward decentralized alternatives like Bitcoin, which offers a fixed supply cap as protection against inflation.
Markus Thielen, founder of 10x Research, noted in a client memo that “The U.S. is now pursuing full-scale economic pressure on China, which may be forced to respond with quantitative easing and a currency devaluation. If so—and if China permits capital flight—Bitcoin could surge, much like it did in 2015.”
The Chinese central bank’s 1.9% yuan devaluation on August 11, 2015, was the most substantial single-day depreciation in over two decades. It sent shockwaves across global financial markets. Bitcoin initially fell over 20% with US stocks but quickly turned higher and surged nearly 60% in the following four months.
Regulatory Hurdles May Limit Impact
Despite historical patterns suggesting a bullish Bitcoin reaction to yuan depreciation, China has become increasingly anti-crypto over the years. The country now has some of the world’s harshest regulations against digital assets.
A new regulation announced earlier this year requires banks to monitor and report suspicious international transactions, including those involving cryptocurrency. Banks must investigate and report risky crypto trades, which may result in financial restrictions for traders.
These stringent measures mean local traders may struggle to diversify into Bitcoin and other digital assets if yuan depreciation continues. “Since August 2024, the Supreme People’s Court has increased the legal risks for individuals using cryptocurrencies in connection with money laundering, which could easily extend to cases of capital flight,” Thielen noted.
On April 7, the US president vowed to increase tariffs against China, which responded by stating it “will fight to the end.” The Chinese Commerce Ministry warned, “If the US implements escalated tariff measures, China will resolutely take countermeasures to defend its own interests.”
Bitcoin’s current metrics, as reported by CoinMarketCap, include a price of $80,253.26 and a market cap of $1,592,882,992,461. It holds a market dominance of 62.56% with a trading volume of $88,736,381,341.05.
While regulatory obstacles exist, many analysts remain optimistic that the economic strategies of both China and the US Federal Reserve could enhance Bitcoin’s appeal as a hedge against traditional financial uncertainty.
