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BitMEX’s Arthur Hayes: China’s Currency Play Could Ignite Bitcoin’s Next Moon Shot
In a surprising move, the Chinese government has fixed the yuan beyond the key 7.2 level against the US dollar, likely in response to US tariffs and trade tensions. This drastic action may have significant implications for the global financial markets, including the price of Bitcoin.
The PBOC’s decision to allow the yuan to depreciate further has long been considered a “harder line in the sand” by market analysts. While it is not unprecedented for the USD/CNY pair to trade above this level, it has never established a foothold there before. This managed depreciation strategy is aimed at keeping China’s exports cheaper and more competitive, potentially offsetting the negative impact of Trump’s tariffs on Chinese goods.
However, this approach creates conditions that have historically driven wealthy Chinese citizens to seek wealth preservation outside government reach. As a result, Bitcoin could benefit from the distrust in traditional financial systems, further fueling its rise.
The move may also lead some analysts to believe that investors are using cryptocurrency as a hedge against currency weakness. Bybit co-founder and CEO Ben Zhou echoed this view, stating on social media that “China will try to lower RMB to counter the tariff, historically whenever RMB drops, a lot of Chinese capital flows into BTC, bullish for BTC.”
Despite these historical correlations, China’s strict crypto regulations present significant obstacles to this narrative. The country has implemented some of the world’s toughest crypto rules in recent years. A new regulation announced earlier this year requires Chinese banks to monitor and report suspicious international transactions, including those involving cryptocurrency.
These measures make it difficult for local traders to diversify into Bitcoin and other digital assets even during yuan depreciation. “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,” noted Markus Thielen, founder of 10x Research, in a note to clients on Monday.
As such, the PBOC’s actions may have unintended consequences on the global cryptocurrency market.
Source: https://coincentral.com/bitmexs-arthur-hayes-chinas-currency-play-could-ignite-bitcoins-next-moon-shot/
