Key Notes
- China is adopting an unconventional monetary policy to tackle the impact of US tariffs.
- Bitcoin and risk assets may benefit from the monetary shift in the long run.
- BTC price is stabilizing after the latest selloff earlier this week.
Bitcoin BTC $78 419 24h volatility: 0.2% Market cap: $1.56 T Vol. 24h: $44.63 B , the world’s largest digital asset, could be on the edge of a major price swing. This speculation is growing as China adjusts its monetary policy, a shift that could lead to greater demand for Bitcoin and other cryptocurrencies.
With Bitcoin and risk-on assets maintaining a susceptibility to the monetary policies of top economies like China, the potential positive shift appears imminent.
Yuan Weakens as China Responds to Economic Pressure
The People’s Bank of China ( PBOC ) has initiated a move to allow the yuan to weaken beyond a significant level. This move sets the daily reference rate at 7.2038 against the dollar. Per the update, this will be the lowest fix since September and signals a change in how the central bank manages the currency.
It is worth noting that the yuan cannot float freely like the US dollar or the euro. Instead, it trades within a 2% band on either side of a set rate announced each morning by the central bank.
Many experts believe this decision is a response to renewed pressure from the United States. Since his return to the White House, President Donald Trump has imposed tariffs on Chinese goods . China’s move could be aimed at making its exports more competitive by keeping the currency weaker.
Additionally, the 7.2 yuan-per-dollar level has long been a key psychological barrier. In the past, the central bank has stepped in when market forces pushed beyond that level. This time, however, the bank is stepping back, allowing the yuan to slide past it officially.
According to the development, some analysts believe this could mark the beginning of Chinese authorities’ broader, managed depreciation strategy. A move that could benefit risk-on assets.
Bitcoin Could Benefit from Chinese Capital Flight
Historically, when the yuan loses value, there is increased interest in moving money out of China. In the past, some of that money has flowed into Bitcoin. Crypto experts are already noting similarities between today’s situation and events in 2013 and 2015 when a noticeable rise in Bitcoin’s price followed the yuan devaluation.
In his recent X post, Arthur Hayes , the former CEO of BitMEX, disclosed that if the US Federal Reserve does not take steps that favor Bitcoin, then the PBOC might do so indirectly. Past yuan devaluations have supported a narrative of Chinese capital flowing into crypto, especially Bitcoin.
If not the Fed then the PBOC will give us the yachtzee ingredients.
CNY deval = narrative that Chinese capital flight will flow into $BTC .
It worked in 2013 , 2015, and can work in 2025.
Ignore China at your own peril. pic.twitter.com/LAOeQZEjZt
— Arthur Hayes (@CryptoHayes) April 8, 2025
Still, several factors may make this difficult. For instance, China has strict regulations regarding cryptocurrency activity. According to a new regulation , banks are required to monitor and report suspicious international transactions, especially those linked to crypto.
Analyst Markus Thielen also noted that legal risks for individuals using crypto for capital movement have grown even steeper since August 2024. Despite this, a strong enough economic push could still reach the Bitcoin market.
Coinspeaker reported that crypto market liquidations jumped to $1.4 billion after Bitcoin price dropped by 8% earlier this week. BTC price fell to $76,100. However, when writing, CoinMarketCap data shows Bitcoin was trading at $79,117.01, up more than 3% in the last 24 hours.
nextDisclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.
