As President Donald Trump imposes a high tariff of 104% on Chinese imports, the Chinese government is moving to devalue the yuan in response. There are predictions that this movement could drive a Bitcoin (BTC) bull market again.
On the 8th, the exchange rate between the yuan and the US dollar fell to its lowest level since 2023. This is interpreted as a signal from the People's Bank of China that it will no longer limit exchange rate volatility. Wang Ju, head of exchange rate strategy at BNP Paribas, said in an interview with Reuters, "Expectations are growing that China will further devalue the yuan" and "This pressure will be difficult to resolve for the time being."
If the yuan's value declines long-term, there is a high possibility that Chinese domestic capital will be diversified into safe assets, with Bitcoin being re-examined as a promising alternative. Arthur Hayes, co-founder of BitMEX, predicted, "As in 2013 and 2015, the same trend could repeat in 2025."
Ben Zhou, co-founder and CEO of Bybit, also agreed with this perspective. He said, "The Chinese government is likely to tolerate a weak yuan to mitigate the trade war" and "This could lead to a massive inflow of Chinese funds into Bitcoin, which is a very positive signal for BTC." Currently, Bybit is the world's second-largest cryptocurrency exchange, accessible to mainland Chinese users without a VPN, though yuan-based trading is not permitted.
Analysis suggests that expanding foreign exchange market volatility is inevitable amid escalating monetary warfare. Brent Donnelly of Spectra FX Solutions pointed out, "The more trade wars intensify between major economic powers, the greater the 'madness' in the foreign exchange market." In fact, after Trump's presidency, the US Dollar Index (DXY) has sharply dropped from its near 110 peak to below 103 recently. Julien Bittel, a global macro investor, explained, "The decline from late February to early March was very unusual."
The DXY measures the US dollar's value compared to six major currencies including the euro and yen, and generally, when the DXY falls, Bitcoin prices tend to rise. This suggests that Bitcoin can serve as a hedge against a weak dollar.
Ultimately, with the two axes of yuan control relaxation and dollar decline simultaneously in play, the global investor asset reallocation flow is increasingly likely to favor Bitcoin. Amid the geopolitical risk of trade wars, Bitcoin is once again attracting attention as a means of capital flight.
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