Analysts say that China’s market and currency problems in the beginning of 2025 might trigger a “second-term” Bitcoin (BTC) bull run. After experiencing price adjustments in December, the biggest cryptocurrency by market capitalization is now trading above $100,000 once again.
The Chinese yuan (CNY) just dropped to 3.22 to the US dollar, its lowest level since September 2023, according to data from Trading Economics. With the yuan down 0.4% this month and extending its three-month losing trend, this represents a further decrease.
Although the People’s Bank of China (PBOC) has stepped up its efforts to stabilize the yuan, there are still obstacles because of economic tensions leading up to Trump’s inauguration on January 20. According to Reuters, as it gets ready to start a fresh stimulus program to boost the economy, the PBOC cautioned fund managers against pursuing a bond rise.
Depreciation of the yuan puts pressure on bonds and the stock market. Analysts think that declining rates on Chinese government bonds are making the yuan’s problems worse. A year ago, the yield on the 10-year Chinese government bond was 100 basis points higher at 1.6%. The growing yields in the United States contrast sharply with this.
While Nomura predicts a decline to 7.6 by May, BNP Paribas strategists estimate the yuan might hit 7.45 to the dollar by the end of 2025. JPMorgan Chase also backed the forecasts, predicting that the offshore yuan may fall to 7.5 in Q2 and that the currency would continue to deteriorate.
Also see Bitcoin-focused TVL is allegedly manipulated by Solv Protocol. Investors in the Chinese stock market are also suffering the brunt of the economic unrest in the country. The blue-chip stock index, the CSI 300, dropped to its lowest level since September on Monday.
The ChiNEXT Index, which measures creative and high-growth SMEs, has decreased by 8% since the beginning of December, according to TradingView.
Analysts warn that in order to avoid further financial volatility, the PBOC is likely to refrain from a swift and chaotic depreciation of the yuan. The currency’s onshore trading range, which is now set at levels higher than 7.2, is still within the central bank’s supervision.
The markets for bitcoin and other cryptocurrencies are getting ready for a rise.
In the meanwhile, the cryptocurrency market is beginning to believe that China’s economic difficulties may spark a new boom. Experts in trading have compared China’s economic instability to the recent spike in the price of Bitcoin, predicting that the same thing will happen again.
Bitcoin saw a sharp rise, trading more than three times higher in 2015 as a result of China devaluing the yuan. Once again, the creators of the LondonCryptoClub mentioned this as a possible result.
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