Yuan Prints Best Performance Since 2020, What Impact on Crypto Market?

Jakarta, Pintu News – The Chinese yuan’s strengthening to nearly 4% against the US dollar by 2025 is taking center stage in the world of traditional finance. However, the implications of this strengthening on crypto markets are becoming more complex given Beijing’s increasingly strict regulatory stance.

Yuan Strengthening and Its Impact on Crypto Investment

The strengthening of the Yuan was triggered by several factors, including favorable daily rulings from the People’s Bank of China, inflows back into Chinese stocks, and a decline in the dollar index of around 7%. Central investment banks, such as Goldman Sachs, predict that the Yuan could reach 6.85 per dollar within a year. This Yuan strength is not automatically favorable for crypto investors.

In the past, when the Yuan weakened, Chinese investors tended to seek refuge in Bitcoin (BTC) as a hedge against currency depreciation. However, with a stronger Yuan, this dynamic changes, reducing the incentive for capital flight and making dollar-denominated assets, including Bitcoin, less attractive to Chinese investors.

Strict Regulation on Crypto in China

At a regulatory coordination meeting held on November 29, the People’s Bank of China (PBOC) reiterated its crackdown on virtual currencies. The PBOC warned that crypto speculation has recently increased, which poses new challenges in risk control. The central bank reiterated that virtual currency-related business activities are still “illegal financial activities” in China.

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The PBOC also highlighted specific concerns with stablecoins, citing failure to meet customer identification and anti-money laundering requirements. The authority warned that stablecoins risk facilitating money laundering, fraud and unauthorized cross-border fund transfers, signaling that Beijing sees dollar-bound tokens as a potential loophole for capital flight despite the Yuan’s strength.

Continued Macro Support for Yuan

While a stronger Yuan and stricter law enforcement in China may reduce one of the historical sources of demand for Bitcoin, global liquidity conditions and dollar weakness continue to be key drivers of crypto market direction.

The factors driving Yuan’s appreciation-dollar weakness, anticipated interest rate cuts by the Federal Reserve, and improved global risk sentiment-are traditionally favorable for risk assets. Bitcoin’s rise since August has coincided with the Yuan’s rebound, suggesting that both assets are responding to the same liquidity tailwind.

Conclusion

While the strengthening of the Yuan and tightening regulations in China might reduce demand for Bitcoin from Chinese investors, global liquidity conditions and other macroeconomic factors remain major factors affecting the crypto market. Investors need to consider these dynamics when assessing the future prospects of the crypto market.

FAQ

What are the main causes of the strengthening of the Chinese Yuan in 2025?

The strengthening of the Chinese yuan in 2025 was due to favorable daily fixes from the People’s Bank of China, inflows back into Chinese stocks, and a decline in the dollar index of about 7%.

How does the strengthening Yuan affect the crypto market?

The strengthening Yuan reduces capital flight incentives, making dollar-denominated assets, including Bitcoin (BTC), less attractive to Chinese investors.

What is the People’s Bank of China’s stance on cryptocurrencies in 2025?

In 2025, the People’s Bank of China reiterated its crackdown on virtual currencies, stating that related business activities are still illegal financial activities in China.

What role do stablecoins play in China’s regulatory context?

Stablecoins are considered by Chinese authorities as a potential loophole for capital flight, with the risk of facilitating money laundering, fraud, and unauthorized cross-border fund transfers.

What global factors continue to affect the crypto market despite the strengthening Yuan?

Global liquidity conditions, dollar weakness, and anticipated interest rate cuts by the Federal Reserve are global factors that continue to affect the crypto market despite the strengthening Yuan.

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*Disclaimer

This content aims to enrich readers’ information. Pintu collects this information from various relevant sources and is not influenced by outside parties. Note that an asset’s past performance does not determine its projected future performance. Crypto trading activities have high risk and volatility, always do your own research and use cold cash before investing. All activities of buying and selling bitcoin and other crypto asset investments are the responsibility of the reader.

Reference

• BeInCrypto. Chinese Yuan’s Best Year Since 2020. Accessed on December 3, 2025
• Featured Image: Generated by AI