Trump’s trade war has taken a toll on crypto markets, including Bitcoin. Nevertheless, Arthur Hayes believes that these tariffs could introduce an important opportunity that investors might be missing.
Since reaching its high in January, Bitcoin (BTC) has shed more than half a trillion dollars in market capitalization, primarily due to anxieties surrounding Donald Trump’s trade conflict. However, on April 8, BitMEX co-founder Arthur Hayes suggested that these tariffs could have a concealed, beneficial impact on BTC.
Hayes is particularly focused on how tariffs are influencing the Chinese yuan. On April 8, the currency reached its lowest point of 2023 against the US dollar, trading at 7.31 to one dollar. This decline largely stemmed from concerns about the impact of US tariffs on the Chinese economy.
According to Hayes, a depreciating yuan might push Chinese investors to look for ways to hedge against inflation, with Bitcoin being the most apparent choice. He cited previous instances in 2013 and 2015 when fears of yuan devaluation sparked renewed interest in Bitcoin.
The Influence of China on Bitcoin’s Value
Historically, China has played a crucial role in the Bitcoin market, with many viewing the asset as a safeguard against a declining yuan. In 2013, Bitcoin gained popularity in China amid growing worries over the People’s Bank of China’s easing monetary policies. Back then, the yuan was valued at 6.12 per dollar, compared to the current 7.31.
In August 2015, the central bank devalued the yuan by more than 3% in a single day to boost exports and economic development. Bitcoin’s price soared from $200 to $500 by November. These occurrences illustrate how shifts in monetary policy can directly influence Bitcoin’s demand.
However, Bitcoin isn’t the sole inflation hedge for Chinese investors. In fact, many are turning to gold, which has consistently appreciated throughout the year. Additionally, legal uncertainties and stringent regulations might deter many average investors from purchasing Bitcoin.