Key Takeaways
- China vows to fight U.S. tariffs to the end, and its retaliatory strategy could be bullish for crypto.
- The central bank is devaluing the yuan to prop up the trade market.
- Historically, a weakening yuan has sparked capital flight into Bitcoin.
As global markets brace for a fresh round of U.S.-China trade tensions, Beijing is signaling it will not back down.
In a sharply worded statement on Tuesday , China’s Ministry of Commerce warned that the country would “fight to the end” in response to escalating U.S. tariffs.
While the geopolitical ramifications are vast, some investors are closely watching another angle: crypto.
China’s Tariff Retaliation Could Be the Spark Crypto Needs
China’s central bank could be preparing to devalue the yuan in a strategic move to bolster exports and cushion the economic blow.
On Tuesday, the offshore yuan fell to its lowest level in two months, while the onshore rate slipped to lows not seen since September 2023. As the yuan edges closer to a 10-year low against the dollar, history suggests crypto could benefit.
Past episodes of yuan weakness have coincided with surges in crypto market activity.
In both 2013 and 2015, when Beijing loosened its grip on the currency, Bitcoin saw significant inflows from Chinese investors seeking refuge from a depreciating fiat.
With the yuan now decoupling from the dollar again, some analysts believe we could see a similar pattern emerge.
The Hang Seng China Enterprises Index posted its biggest gain since 2008 earlier this week, even as the yuan plummeted.
Chinese officials are also reportedly considering offloading government bonds and extending pledged loans to stabilize the market, underscoring the seriousness of their response.
“The U.S. hegemonic move in the name of reciprocity serves its selfish interests at the expense of other countries’ legitimate interests and puts ‘America First’ over international rules,” the Chinese embassy said, framing the tariff dispute in harsh terms.
Crypto Reacts to Market Jitters
Bitcoin (BTC) briefly rebounded on Tuesday morning, surging from a multi-month low of $74,650 to over $80,000.
The bounce followed a rumor —later debunked—that the White House was considering a 90-day pause on tariff escalations.
Though gains were short-lived, the late-day recovery demonstrated resilience in crypto markets.
Ethereum (ETH) also staged a rally, climbing above $1,600 after falling to $1,411 earlier in the day.
The gains, while modest, suggest investors are keeping a close eye on macroeconomic cues—including yuan moves—as potential catalysts.
The Bottom Line
While most nations have attempted to negotiate their way out of U.S. tariffs, China is positioning itself for a prolonged economic standoff.
If history is any guide, further yuan devaluation could ignite a new round of crypto investment from capital flight.
With geopolitical uncertainty on the rise and traditional markets under pressure, digital assets might once again become a favored hedge.
Crypto traders are now betting that what hurts China’s fiat could breathe new life into Bitcoin and broader market.
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