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As cryptocurrency volatility persists, Trump is suggesting unsustainable tariffs while central banks lower interest rates. Despite Trump’s call for rate reductions, the Fed remains indifferent, continuing its delays. In this scenario, what actions is China taking?
China and Cryptocurrency
China is already preparing an environment conducive to risk markets by increasing economic incentives. While the dynamics surrounding cryptocurrencies can be dizzying, one of the supportive factors is China’s expansion. Arthur Hayes, one of the founders of BitMex, recently warned to pay attention to China in his latest blog post.
“Xi Jinping aims to keep the yuan stable against the dollar, regardless of the circumstances. If the dollar supply increases, he can instruct the People’s Bank of China to boost yuan supply to maintain the dollar-yuan exchange rate.”
China’s Monetary Expansion
This week, People’s Bank of China President Gongsheng announced that interest rates would decrease, and the required reserve ratio for banks would be reduced to increase liquidity. Monetary expansion typically leads to upward trends in risk markets, making China’s support crucial for cryptocurrencies.
A spokesperson from Nexo referred to past scenarios, stating:
“In previous instances when China increased monetary incentives and injected excessive liquidity, as seen in 2015 and 2020, alternative assets became more attractive. Such incentives can have broader effects on global markets, increasing appetite for stocks and alternative assets.”
China and Bitcoin Reserves
Wherever the U.S. is active globally, we should also recognize China as its competitor. Is the U.S. seeking competition in accumulating Bitcoin 
$107,674 reserves? Crypto investors definitely want this. Recently, David Bailey, CEO of BTC Inc, claimed on his X account that China is working to establish its own strategic Bitcoin reserves.
According to him, China has been holding closed-door meetings on this subject since the election.
“They have been having discussions behind closed doors regarding this matter since the election.”
Should mining return to China, the country could generate significant revenue. Furthermore, if the U.S. adopts Bitcoin as a strategic reserve, it would present a significant obstacle to denying Bitcoin’s status as a value storage vehicle. Perhaps China can indeed achieve this.
