On Friday, the People’s Bank of China (PBOC) took action to curb the yuan’s depreciation, which has been fueling speculation about its potential impact on Bitcoin (BTC). To help stabilize the situation, the central bank announced it would halt its bond purchases for the month. This decision comes as demand for government bonds has outpaced supply, putting pressure on bond yields.
Experts suggest that the move reflects growing concern among policymakers over the ongoing drop in bond yields and the weakening yuan. The yield on China’s 10-year government bond recently fell below 1.6%, marking a significant 100 basis point decline over the past year, according to TradingView data.
In contrast, U.S. bond yields have been rising, with the 10-year U.S. Treasury yield climbing to 4.7%—the highest level since November 2023. This widening yield gap between the U.S. and China has contributed to the yuan’s slide to 7.32 per USD, continuing its three-month downward trend. The depreciation has been compounded by concerns surrounding the tariffs expected under President-elect Donald Trump’s upcoming administration.
As the yuan weakens, analysts predict that capital outflows could follow, potentially boosting interest in cryptocurrencies like Bitcoin. This could further fuel Bitcoin’s bullish momentum as some investors seek alternatives to traditional assets.
