The Chinese Yuan (CNY) closed off Wednesday April. 9 at its lowest point against the U.S dollar since December 2007. This decline in the CNY compared to the U.S dollar came as Trump’s tariffs to China came into effect. Additionally, the U.S president highlighted an increase of the tariffs from 104% to 125% further putting pressure on the tariff war between the two economic giants. 

Devaluation of CNY against the U.S dollar has sparked discussions about the impact it could have on the crypto market. Particularly, some experts believe that the drop in China’s currency could drive more adoption to Bitcoin. But the question remains whether this will be the case!

Chinese Yuan’s Drop Against the U.S Dollar

The Chinese Yuan recently fell to a 18-year low against the U.S dollar. As shared on X by Barchart, the recent performance by USD/CNY is the weakest level recorded since 2007. The Chinese currency closed off at the 7.3393 level. 

As of this writing, data on TradingView shows that the reference rate for this pair  (USD/CNY) sits at 7.3205, slightly below yesterday’s close. The drop suggests that China might hasten the tariff negotiations with the U.S to prevent weakening of their currency. 

If the CNY continues to drop against the USD, both domestic and foreign investors might pull the money out of the country. Such a scenario would trigger a slam of the domestic asset prices as well as cause financial market volatility. 

What’s Causing the CNY Decline Against the USD? 

The recent decline in the Chinese Yuan against the dollar is caused by the ongoing trade tariffs war between China and the U.S. Donald Trump announced earlier that the tariffs to other countries will have a 90-day pause with an exemption of China. 

Additionally, Trump raised the U.S tariffs to China to 104% as part of its retaliation. As shared by Watcher Guru on X on April.10, the “US tariffs on China now totals 145%.”

While China has been retaliating against the U.S tariffs, it’s now crucial for the country to consider economic stability. Based on a recent report by Reuters, the senior fellow at the Brookings Institution Robin Brooks, stated that “everything now depends on China.” If the trade war between the two giants continues, the Chinese Yuan could dip further against the USD.

Will Investors Shift to Bitcoin Amidst the Trade War? 

In a post on X in April. 5, Arthur Hayes (the founder of BitMex), highlighted that nations and investors might shift to “old-style” monetary assets not tied to a single government. Notably, Hayes wrote; “For those who want to adapt to a return to pre-1971 trade relationships, buy gold, gold miners and BTC.”

Hayes’ conclusion stems from Bitcoin being more appealing in a world defined by decentralization, capital mobility, and reduced trust in traditional power structures. Similar to 2013 and 2015, Chinese investors may turn into Bitcoin to safeguard their assets from the Yuan which is losing value against the U.S dollar. If this happens, capital inflow into Bitcoin could fuel a price rally towards $1 million as predicted by Hayes.