TLDR
- China’s central bank (PBOC) allowed the yuan to depreciate beyond the key 7.2 level against the USD, likely in response to US tariffs
- BitMEX founder Arthur Hayes believes this devaluation could lead to capital flight into Bitcoin, potentially catalyzing a new crypto bull run
- Bybit CEO Ben Zhou noted historically when the yuan drops, Chinese capital flows into BTC
- Analysts draw parallels to similar situations in 2013, 2015, and 2019 when yuan weakness coincided with Bitcoin price increases
- Despite potential capital flight to crypto, China has implemented harsh cryptocurrency regulations that may hinder local traders
The People’s Bank of China (PBOC) has eased its grip on the yuan, allowing it to depreciate beyond the key level of 7.2 against the US dollar. This move, which occurred on Tuesday when the PBOC set the daily yuan fix at 7.2038 per dollar, is widely seen as a response to the aggressive tariffs recently announced by US President Donald Trump.
The 7.2 level has long been considered a “harder line in the sand” for the Chinese central bank. While the USD/CNY pair has traded above this level a few times since 2022, it has never firmly established itself beyond this point until now.
Cryptocurrency industry experts believe this currency devaluation could have major implications for Bitcoin and the broader crypto market. BitMEX founder Arthur Hayes suggested on social media that the PBOC’s actions might provide the “catalyst needed to resume the crypto market bull run.”
Hayes referenced past instances when Chinese capital flight flowed into Bitcoin, stating: “It worked in 2013, 2015, and can work in 2025.” He’s not alone in this assessment.
Historical Patterns Point to Potential Bitcoin Boost
Bybit co-founder and CEO Ben Zhou echoed these sentiments, noting that China will likely continue to lower the yuan to counter the tariffs. “Historically, whenever RMB drops, a lot of Chinese capital flows into BTC, bullish for BTC,” Zhou stated on X (formerly Twitter).
This pattern has been observed several times in recent history. In August 2015, China devalued the yuan by nearly 2% against the US dollar, marking the largest single-day drop in decades. Bitcoin saw increased interest during this period.
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. Some analysts suggested Chinese investors were using Bitcoin as a hedge as the asset jumped 20% in the first week of that month.
Markus Thielen, founder of 10x Research, pointed out this historical connection in a note to clients. “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 soâand if China permits capital flightâBitcoin could surge, much like it did in 2015,” Thielen wrote.
The yuan has been weakening against the US dollar since 2022. The current move by the PBOC signals a shift to managed depreciation, which will help keep China’s exports cheaper and more competitive, potentially offsetting the negative impact of Trump’s tariffs on Chinese goods.
Regulatory Hurdles May Limit Impact
While history suggests a bullish reaction for Bitcoin in response to yuan depreciation, China’s regulatory landscape has changed dramatically. The country has adopted some of the world’s harshest cryptocurrency regulations in recent years.
A new regulation announced earlier this year requires Chinese 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 and potential blacklisting for traders.
These stringent measures mean local traders may face challenges when trying to diversify into Bitcoin and other digital assets if the yuan continues to depreciate.
“Since August 2024, the Supreme People’s Court has greatly increased the legal risks for individuals using cryptocurrencies in connection with money laundering, which could easily extend to cases of capital flight,” Thielen noted. “This presents a major deterrent, despite rising economic uncertainty.”
The tensions between the US and China continue to escalate. On April 7, the US president vowed to implement additional tariffs against China, which responded by stating it “will fight to the end.”
“If the US implements escalated tariff measures, China will resolutely take countermeasures to defend its own interests,” the Chinese Commerce Ministry said in a statement.
Wealthy Chinese citizens have reportedly used cryptocurrencies in the past to preserve their wealth, move it beyond government reach, and avoid capital controls within the country. Currency devaluations may also damage trust in central banks and government financial management, potentially driving people toward decentralized alternatives like Bitcoin.
For now, market participants are watching closely to see if historical patterns will repeat, with Bitcoin potentially benefiting from capital seeking refuge from a weakening yuan.
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