China’s response to U.S. tariffs is quietly disrupting global cash flows, impacting the crypto market. President Trump imposed steep import tariffs on nearly all goods from China since taking office, with an average tariff of approximately 29.3% as of January 2026. In response, China has managed the yuan's exchange rate tightly, maintaining export competitiveness and containing deflation. According to a recent note by JPMorgan, this control has amplified dollar-led liquidity cycles, especially during trade tensions.

The interplay between China’s currency management and global liquidity significantly affects Bitcoin. When dollar liquidity becomes scarce during tariff-induced risk-off periods, Bitcoin tends to decline; conversely, it rebounds when trade tensions ease. For instance, this pattern was evident in March-April last year amid escalating trade tensions. Unlike the U.S., where capital movements directly influence markets, China’s influence on crypto prices is more indirect, operating through currency management and liquidity cycles.

MORE FROM COINTIMES

UK Security Chair Calls for Crypto Donation Moratorium Amid Foreign Interference Concerns

UK security committee chair Matt Western urges a temporary ban on crypto donations to political parties amid fears of foreign interference in elections.

JPMorgan’s outlook suggests that while China may not allow the yuan to strengthen significantly, the combination of tariffs, managed foreign exchange policies, and dollar liquidity continues to shape the macro environment for Bitcoin. Despite a web of U.S. tariffs, China’s export engine remains robust, with real exports expected to grow and global market share rising, as reported by JPMorgan Private Bank. The bank highlighted a deliberate strategy to manage the yuan tightly, which has only marginally strengthened against the dollar.

This stability reflects an ongoing effort to diversify exports toward ASEAN and other regions while coping with deflationary pressures. The report indicates that recent yuan strength is likely seasonal, with a medium-term outlook focused on maintaining a stable, range-bound trajectory for the currency. For crypto markets, this means that rather than relying on sustained yuan appreciation, the focus shifts to liquidity transmission and dollar dynamics.

In summary, China’s tight control over its currency amidst U.S. tariffs has profound implications for Bitcoin and broader crypto markets. As the situation evolves, it remains crucial for investors to monitor these macroeconomic factors closely, as they will dictate Bitcoin's performance in the face of ongoing trade tensions. The interplay between currency management and market liquidity will continue to be a defining factor for Bitcoin's trajectory moving forward.