Is this what Catalyst Bitcoin Bulls are waiting for? China allows Yuan to fall below 7.2 per US dollar
China improved its grip on Yuan (CNY) on Tuesday, allowing it to reduce beyond a major level, likely in response to President Donald Trump’s aggressive tariffs.
Crypto analysts expect that Yuan coherence may favor Bitcoin (BTC), drawing similarities to similar events from a decade ago.
Early Tuesday, the People’s Bank of China (PBOC) Set the so-called daily yuan arrangement At 7.2038 per dollar on Tuesday, the weakest since September. Yuan is not a free float currency like the USD, Euro and other G-7 countries and is allowed to trade in a range of 2% on either side of the daily arrangement announced at 9:15 am Beijing Time.
The level of 7.2 has been considered a “more difficult sand line” for the central bank for many years. The USD/CNY pair has been exchanged above the said level several times since 2022 but has never established a foothold.
That may change the PBOC clearly setting the daily mid-point beyond the level of 7.2. In other words, the transition indicates a move to the managed exhaustion of the Yuan, which will help maintain China’s exports cheaper and competitive, that potentially to offset the negative impact of Trump’s tariffs on Chinese goods.
Capital flight to BTC?
Managed losses can also be able to spare capital flights from China, which can find home in cryptocurrencies, according to analysts.
“The US is now pursuing the whole economic pressure in China, which may be forced to respond with a volume of easing and a lowering of money. Then-and if China allows capital flying-Bitcoin can seize, as in 2015,” Markus Thielen, founder of 10x research, said a note to the clients.
The Chinese Central Bank appreciated Yuan by 1.9% on August 11, 2015, the most important precautionary shrinkage of single day for two decades, sending shockwaves throughout the global financial market. Bitcoin first fell to 20% with US stocks but rose rapidly and advanced nearly 60% in the following four months.
Ben Zhou, CEO and founder of the Crypto Exchange Bybit, expressed a similar opinion on X, saying that the Yuan’s backbone tend to bode properly for Bitcoin.
“China will try to lower the RMB to counter the tariff, historically, every time RMB decreases, many Chinese capital flows into BTC, bullish for BTC,” Zhou told X.
Regulations barriers
While history tells us to expect a BTC’s bullish reaction to Yuan’s shrinkage, remember that in recent years, China has become anti-crypto, citing financial stability risks and there are some of the world’s worst regulations.
A new regulation announced Earlier this year it takes banks to monitor and report weakness international transactions, including cryptocurrency involvement. Banks are obligated to investigate and report any dangerous crypto trading, which may result in financial restrictions and potential balacking for the entrepreneur.
Strict bearing means that local merchants can have a tough time to divert bitcoin and other digital ownership in the event of a long yuan losses.
“Since August 2024, the Supreme Court has significantly increased legal risks for individuals who use cryptocurrencies related to money losses, which can easily expand in capital flight cases,” Thielen said. “It presents a major restraint, despite increasing economic uncertainty.”
