As China grapples with a financial meltdown marked by a falling currency, falling stocks and falling bond yields, some analysts believe capital flight from the country could fuel Bitcoin’s (BTC) ongoing rally.
Bitcoin Bull Run Could Be Fueled by Market Turmoil in China, Experts Say
The Chinese yuan (CNY) fell to 3.22 per US dollar, its weakest level since September 2023 and extended a three-month losing streak.
The yuan continues to fall despite interventions by the People’s Bank of China (PBOC), such as stronger daily reference rates and tightened offshore liquidity.
Chinese stocks are also struggling. The CSI 300, a gauge of blue-chip stocks on the mainland, hit its lowest level since September.
Meanwhile, the ChiNEXT Index, which tracks high-growth small and medium-sized enterprises, has fallen 8% since the beginning of the year.
Adding to investors’ concerns, the yield on 10-year Chinese government bonds fell a full percentage point from a year ago to 1.6%, reflecting growing deflation fears.
Amid this economic turbulence, analysts see Bitcoin as a potential haven for capital fleeing China.
“China appears to be letting its currency fall and no longer defending it aggressively, allowing for a gradual devaluation,” the founders of LondonCryptoClub said in a statement.
“This will accelerate capital flight from China, and Bitcoin would be an obvious target for some of these flows, especially given the country’s strict capital controls.”
Historical precedent supports this view. When China devalued the yuan in 2015, Bitcoin experienced a significant price increase, more than tripling shortly thereafter.
*This is not investment advice.
