Former President Donald Trump’s trade policies targeting China with increased tariffs could inadvertently bolster Bitcoin, according to several market analysts. The pressure on the Chinese economy, evidenced by the yuan hitting a 16-month low on Monday, is expected to drive capital outflows, potentially benefiting the cryptocurrency market.
David Brickell, head of international distribution at FRNT Financial, points to a precedent: “When China devalued its currency in 2015, Bitcoin promptly traded over three times higher.” He argues that a weakening yuan will accelerate capital flight from China, with Bitcoin becoming a prime destination due to existing capital controls restricting traditional channels.
Brickell’s view is echoed by other cryptocurrency observers, who anticipate a bullish trend for cryptocurrencies under the influence of Trump’s policies. Analysts at Bernstein and Standard Chartered predict a dramatic surge, projecting Bitcoin could reach $200,000 by the end of 2025. A more ambitious forecast from 10x Research suggests Bitcoin could hit $120,000 by January 20, 2025
This optimism stems partly from Trump’s pro-crypto stance during his presidential campaigns and appointments of figures like Paul Atkins, considered for the chair of the Securities and Exchange Commission, and David Sacks, potentially as an AI and crypto czar.
The looming threat of renewed trade tensions with the US adds to China’s existing economic challenges, including slow growth and a protracted downturn in the property market. A $284 billion stimulus package, the largest since the pandemic, was announced in September by the Chinese government in an attempt to revitalize the economy. This week, as reported by the Financial Times, Chinese regulators sought to reassure international investors amidst the renminbi’s decline to a record low.
