China’s currency hits a 2.5-year high as the dollar weakens — a classic bullish setup for Bitcoin that isn’t working. Yuan hits 2.5-year high as Chinese exporters sell dollars — over $1 trillion offshore may flow back home. The rally is being driven by Chinese exporters rushing to convert their dollar revenues into yuan before year-end.
This is more than seasonal housekeeping — analysts estimate that over $1 trillion in corporate dollars held offshore could eventually flow back to China. Some brokerages believe this is only the beginning. The headwinds that pressured the yuan for years — trade tensions, capital flight, a surging dollar — are now reversing into tailwinds. If the Fed eases more aggressively in 2026, as some expect, the yuan’s climb could accelerate further.
A weakening dollar typically lifts Bitcoin. Gold is playing its part — the metal has hit record highs this month. Yet Bitcoin remains stuck in a $85,000-$90,000 range, unable to sustain breaks above $90,000 despite three attempts this week alone. The bullish case isn’t dead, just deferred.
Some analysts expect the dollar to weaken further in 2026, particularly if US monetary easing exceeds current market expectations. If that thesis plays out, Bitcoin’s muted response to current dollar weakness may reflect timing rather than a structural breakdown in the correlation. Once liquidity normalizes in January and Fed policy clarity improves, the yuan’s signal may finally reach crypto markets. For now, Bitcoin watches from the sidelines as China flashes one of the clearest dollar-bearish signals in years.
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