China’s Currency Drops to 19-Month Low as Trade Tensions Rise. What This Means for Crypto?

April 8, 2025

China’s currency, the yuan, has fallen to its lowest level since 2023 following a sharp escalation in trade tensions with the United States. This decline came after the U.S. government announced new tariffs on Chinese imports, including a 104 percent levy on select goods. In response, China has pledged to implement countermeasures, adding further uncertainty to global financial markets.

The People’s Bank of China set the daily reference rate for the yuan at 7.2038 per U.S. dollar, a clear signal that the central bank may be open to allowing a weaker currency in order to support its export sector.

Global Markets React to Growing Instability

Investors around the world are reacting to the situation by shifting capital into more stable assets. Safe-haven currencies such as the Japanese yen and Swiss franc have seen increased demand as confidence in global trade weakens. At the same time, some experts believe that this situation could create a renewed interest in digital assets, especially Bitcoin.

In previous years, when the yuan faced significant downward pressure, Chinese investors turned to cryptocurrencies to preserve their wealth. Notable examples include the 2013 and 2015 devaluations, which coincided with rising Bitcoin activity.

Crypto May Benefit as a Safe-Haven Alternative

Arthur Hayes, co-founder of BitMEX, has suggested that a continued decline in the yuan could lead to increased demand for Bitcoin. He noted that if the People’s Bank of China allows the yuan to slide further, investors may seek protection in alternative assets like cryptocurrency.

However, the broader crypto market remains mixed. While some analysts expect a potential influx of capital into digital assets, others point to ongoing global tensions as a source of market-wide volatility. In recent days, Bitcoin and other major cryptocurrencies have experienced modest declines amid growing investor uncertainty.

Looking Ahead

The situation between China and the United States is still developing, and its full impact on the cryptocurrency market remains to be seen. What is clear is that economic instability often increases interest in decentralized financial systems.

If the yuan continues to weaken and trade tensions deepen, cryptocurrencies may once again prove their value as a global alternative to traditional assets. Investors and analysts alike will be watching closely.