- The 18-year low of the Yuan in the middle of the trade war drives Bitcoin demand because Chinese investors are looking for a decentralized protection against currency risks.
- Strict capital controls in China could boost Bitcoin use again, since investors want to protect their assets in view of the Yuan devaluation.
China’s state currency has fallen to the lowest level for almost two decades, which gives the current trade war between the USA and China a new dimension and increases concern about capital flight and monetary tightening.
The devaluation of the Chinese Yuan (CNY) takes place in the middle of escalating economic tensions between the two largest economies in the world after both sides have raised high tariffs on goods from the other side.
The weakening of the Yuan signals stress in the Chinese financial system and picks up a well -known trend that has been observed in previous currency crises: the shift in the interests of the investor to Bitcoin (BTC) as a decentralized protection against devaluation and capital controls. In an environment in which the relocation of assets from China remains severely restricted, the role of Bitcoin as an alternative value preservation means could be brought back into focus.
The exchange rate of the Yuan to the USD was 7.3412 on April 10, 2025 and thus at the lowest level in almost 18 years. The latest decline is due to a reduction in the entire trade volume between the two largest economies in the world, China and America. Washington has increased the tariffs to Chinese products by 104 %, which prompted Beijing to do the same and to collect an inch of 84 % on US products.
The TradingView market data show that the USD/CNY pairing has been listening to an upward trend since the beginning of March 2025, which went beyond important levels of resistance at 7.3,000 and reached new highs at 7.3504. Currency analysts indicate that the upward trend reflects the growing trust of investors in the US economy and concern about the slowdown recovery by China.
The technical indicators indicate that the Yuan could continue to be under downward pressure if China does not directly intervene in the currency markets or reduces the trading tensions. Without such measures, the CNY remains susceptible to further losses.
Bitcoins hedge-narrative gains attention again
Bitcoin’s ability to act against a weakening of the Yuan has a history. In three earlier cases of CNY devaluation in 2013, 2015 and 2017, Chinese investors were looking for refuge in Bitcoin. The restrictive expiration policy, which is taken to the flow of cash, which is taken to other countries by citizens to $ 50,000, has often forced investors to look for decentralized means.
BitMEX-Gründer Arthur Hayes repeated recently This opinion and indicated in a social media post that the CNY devaluation will probably do capital back into Bitcoin. Hayes pointed to past cycles, in which the weakness of the Yuan correlated with the increase in the Bitcoin price, especially in times of domestic financial restrictions.
Capital controls create demand for decentralized assets
Bitcoin has gained attractiveness in domestic investors due to the ongoing practice of China to restrict the capital flow between the borders. The local trading platforms Huobi (formerly HTX) and OKX observed Bitcoin trade volumes during the recent currency crises despite regulatory enforcement measures.
According to reports, over 90 % of the global Bitcoin trade volume was reported to Chinese stock exchanges before regulatory measures reduced this number. Nevertheless, the demand for Bitcoin as a non-state asset during economic uncertainty has required.
Industry observers argue that Bitcoin could be a practical instrument for Chinese investors who want to get their value without relying on traditional financial systems as long as capital controls exist and the Yuan continues to weaken.
Outlook: Bitcoin can benefit from currency fluctuations
While the future development of the trade war between the USA and China remains uncertain, the effects on Bitcoin are becoming increasingly clear. Studies indicate that due to the currency devaluation, Bitcoin could attract an increased interest of the Chinese investors if the investment restrictions remain.
Historical patterns show that the Bitcoin course tends to respond positively to a CNY weakness, driven by internal demand within China and the wider global investor mood.
The next political decisions of China will be observed closely by the financial markets, since Bitcoin will benefit due to its decentralized nature as a global value preservation in situations in which currencies are under monetary pressure and capital movements are limited.
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