BitMEX founder Arthur Hayes suggests that China's response to U.S. trade tariffs may lead to capital flight into Bitcoin and cryptocurrencies.
"If not the Federal Reserve, then the People's Bank of China will provide us with Yahtzee material," Hayes stated on X on April 8, referring to the catalyst needed to restore the cryptocurrency market's bull market.
Hayes noted that if the renminbi depreciates, "capital will flow into Bitcoin," adding that "this worked in 2013, 2015, and will work in 2025."
Bybit co-founder and CEO Ben Zhou stated that China will attempt to lower the renminbi exchange rate in response to tariffs, and added that historically, whenever the renminbi depreciates, it has been beneficial for Bitcoin.
In August 2015, China devalued the renminbi against the U.S. dollar by nearly 2%, marking the largest single-day drop in decades. During this period, Bitcoin did attract some investor interest, though a direct causal relationship remains disputed.
When the renminbi-to-dollar exchange rate fell below the symbolic 7:1 in August 2019, Bitcoin's price also rose during the same period. Some analysts believe Chinese investors were using Bitcoin as a hedging tool, as the asset rose 20% in the first week of that month.
In 2019, crypto asset management company Grayscale noted the renminbi's depreciation and attributed it as a factor stimulating the Bitcoin market.
Avoiding Currency Controls and Preserving Wealth
According to analysts, wealthy Chinese citizens may have used cryptocurrencies to preserve wealth, keeping it beyond government control and avoiding domestic capital controls and restrictions.
It is also believed that currency depreciation can damage people's trust in central banks and government financial management, prompting them to turn to decentralized alternatives like Bitcoin.
On April 7, U.S. President Trump threatened to impose additional tariffs on China, to which China responded that it would "fight to the end".
China's Ministry of Commerce stated in a declaration: "If the U.S. implements escalated tariff measures, we will resolutely take countermeasures to defend our own interests."
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