China’s mounting national debt could further solidify Bitcoin’s reputation as a safeguard against currency devaluation.
Reports indicate that China may soon approve a significant fiscal package, possibly adding more than 10 trillion yuan (around $1.4 trillion) to its national debt. Sources close to the matter disclosed to Reuters that this move could be influenced by global events, including the potential re-election of Republican candidate Donald Trump.
Should this proposal go forward, China could raise this massive sum over the next three years to help local governments manage their debt obligations.
The news could increase Bitcoin’s appeal as a defense against monetary instability, particularly among Chinese traders, says Arthur Hayes, co-founder of BitMEX. He highlighted this in an October 28 blog post, calling the situation a “great buying opportunity”:
“The fact economists are bearish on the size and scale of the stimulus so far presents a great buying opportunity. When wealthy coastal Chinese buyers realize they need to own Bitcoin regardless of its yuan cost, the upside could resemble the volatility seen back in August 2015.”
Hayes’ remarks came shortly after Bitcoin crossed the $70,000 mark for the first time since early June, bolstered by anticipation surrounding the U.S. presidential election on November 5.
Bitcoin price surged fivefold last time China raised debt
Hayes’ perspective draws from Bitcoin’s historical behavior following periods of substantial national debt increases and currency devaluation. In 2015, for instance, the People’s Bank of China (PBOC) implemented three consecutive devaluations of the yuan, resulting in a loss of over 3% in its value. Bitcoin reacted with a significant price jump, as Hayes noted:
“[In August 2015] following a surprise yuan devaluation by the PBOC, Bitcoin rose from $135 to $600 — nearly a fivefold surge in under three months.”
Well-known figures like Michael Saylor of MicroStrategy view Bitcoin as the premier hedge against inflation and the erosion of fiat currency values.
Asian buyers fuel Bitcoin’s push towards new highs: Nansen
Bitcoin’s price is approaching a breakout to a new all-time high, with Asian buyers playing a key role in the latest price movements.
Aurelie Barthere, principal research analyst at Nansen, observed that:
“BTC surged towards all-time highs at 1:30 a.m. CET, likely propelled by Asian market demand. It’s uncertain if this is linked to China’s fiscal announcement, pre-election excitement in the U.S., or simply Bitcoin’s positive trend momentum. Perhaps it’s a mix of all these elements.”
Analysts from Bitfinex also predict that Bitcoin could rally to $80,000 by the end of 2025, driven by option market dynamics and a possible Republican presidential win.
A Trump victory in the upcoming U.S. election is largely viewed as positive for high-risk assets like Bitcoin, especially given its recent correlation with Trump’s polling success.
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