Beijing, March 20, 2025 — A recent article from Chinese state media has spotlighted Bitcoin’s significant price volatility, asserting that it is unfit to function as a currency while recognizing its potential as an investment vehicle. The piece, published in a major outlet linked to the Chinese Communist Party, also voiced concerns over U.S. dollar-backed stablecoins strengthening America’s grip on global finance. It urged China to hasten the development of its digital yuan (e-CNY) to bolster its standing in the digital economy.
Bitcoin’s Volatility Undermines Its Use as Currency
The article emphasized Bitcoin’s extreme price swings, a hallmark of the cryptocurrency since its creation. It pointed out that Bitcoin’s value can shift by over 10% in a single day, rendering it unreliable as a medium of exchange or a stable unit of account. For instance, its price soared to nearly $69,000 in November 2021, only to drop to around $33,000 by January 2022, with only partial recovery thereafter. The report argued that such instability rules out Bitcoin as a practical currency, though it remains attractive to investors willing to embrace high risks for potential high returns.
U.S. Dollar Stablecoins Raise Concerns
The commentary expressed unease about the rising prominence of U.S. dollar-pegged stablecoins like Tether (USDT) and USD Coin (USDC). With a combined market value exceeding $150 billion, these stablecoins are gaining traction in global trade and decentralized finance (DeFi), potentially amplifying the U.S. dollar’s influence worldwide. The article cautioned that this could reinforce American financial dominance, posing a challenge to nations aiming for greater economic independence.
Call to Speed Up Digital Yuan Development
In response, the article pressed Chinese authorities to accelerate the deployment of the digital yuan, or e-CNY. Introduced in pilot phases in 2020, the digital yuan has been trialed in over 25 cities, achieving transaction volumes exceeding 100 billion yuan (about $14 billion) by the end of 2024, per data from the People’s Bank of China (PBOC). The e-CNY is designed to improve transaction efficiency, refine monetary policy, and lessen dependence on existing payment networks. The state media stressed that a strong digital yuan could counter both the unpredictability of decentralized cryptocurrencies and the sway of U.S.-backed stablecoins.
Expert Insight
Analysts suggest that China’s push for the digital yuan aligns with its goal of modernizing its financial system and boosting the yuan’s global presence. Dr. Alicia Garcia-Herrero, Chief Economist for Asia-Pacific at Natixis, remarked: “The digital yuan is more than a technological advancement—it’s a geopolitical strategy. By advancing a state-controlled digital currency, China seeks to broaden the yuan’s international use while keeping firm regulatory oversight.”
Global Financial Implications
The article reflects China’s two-pronged stance on cryptocurrencies: wariness of decentralized assets like Bitcoin paired with proactive development of its own digital currency. As the digital yuan progresses, its success could significantly impact China’s financial autonomy and the broader global financial landscape, potentially challenging the U.S. dollar’s dominance and redefining the trajectory of digital finance.
