Chinese Yuan devaluation could drive Chinese capital flight into Bitcoin– says Arthur Hayes

BitMEX co-founder Arthur Hayes highlighted a potential Chinese Yuan devaluation in his X post on Tuesday, suggesting it could drive Chinese capital flight into Bitcoin. Arthur says this trend worked in 2013 and 2015 and can work in 2025. A Forbes report supports this thesis, noting that Chinese investors turned to Bitcoin during capital flight restrictions in 2017.

Bitcoin demand could surge amid Chinese Yuan devaluation

Arthur Hayes, co-founder of BitMEX and CIO of Maelstrom, posted on his social media platform X on Tuesday that a potential Chinese Yuan devaluation could drive Chinese capital flight into Bitcoin. 

“If not the Fed, then the PBOC will give us the yachtzee ingredients. 

CNY deval = narrative that Chinese capital flight will flow into $BTC,” says Arthur in his X post.

He continued, “It worked in 2013, 2015 and can work in 2025.”

Delving into 2013, China experienced economic growth but faced concerns about capital outflows due to a tightly controlled financial system. There were periods of slight devaluation or loosening of controls to manage export competitiveness. Bitcoin gained significant attention in China, in 2013, acting as a hedge against potential Yuan weakness and a way to bypass strict capital controls (China limits individuals to $50,000 in foreign exchange annually). Chinese investors began pouring money into Bitcoin, especially as it became a speculative asset.

In late 2013, the Chinese exchange, BTC China, became the largest Bitcoin exchange by volume globally, reflecting the surge in demand. Bitcoin started 2013 at $13, crossed $1,000 in November, and reached a high of $1,163 in early December. However, the PBOC intervened in December 2013, banning financial institutions from handling Bitcoin transactions, which caused a sharp correction. Bitcoin ended the year at $732.

Similarly in 2015, the PBOC significantly devalued the Yuan, lowering its reference rate by about 1.9% against the USD—the largest single-day drop in decades. This Yuan devaluation 2015 directly correlated with renewed interest in Bitcoin among Chinese investors.

Bitcoin started 2015 at around $321, declining from its 2013 peak due to the Mt. Gox hack and regulatory pressures. After the Yuan devaluation, Bitcoin’s price began to climb, reaching a high of $502. By early 2016, Bitcoin had more than tripled from its August 2015 low, reaching over $900 by the end of 2016.

In 2017, the Yuan faced continued pressure after further devaluations in 2016. As noted in the Forbes report, China cracked down on capital outflows in 2017, targeting traditional methods like real estate purchases and foreign investments. This pushed investors to seek alternatives like Bitcoin. Chinese cryptocurrency exchanges like Huobi, OKCoin, and BTC China dominated global Bitcoin trading volumes, accounting for over 90%.

“But in late 2017, the Chinese government cracked down on Bitcoin — banning cryptocurrency exchanges. That set off the crash, from $19k to $3k,” says Forbes’ report.

Historical data suggests that the Yuan devaluation or fears of depreciation led to Chinese capital’s flight into Bitcoin, bolstering BTC's bullish outlook and price. These years have aligned with the narrative of Bitcoin as a hedge against the Yuan’s weakness. If this trend continues, Arthur’s thesis suggests repeating the 2013 and 2015 dynamics, where Chinese investors might turn to Bitcoin to preserve wealth, could play out. However, factors like China’s current crypto regulations, global market conditions, the US-China trade war, and tariff policies could influence the outcome.