How Does TWD Appreciation Impact the Market? Bitcoin Unexpectedly Becomes a Safe Haven from Volatility?

On June 18, 2025, the price of Bitcoin (BTC) against the New Taiwan Dollar hovered around the level of 1 BTC ≈ 3,087,976 TWD, with a decline of 4.8% over the past 7 days. However, behind this seemingly calm number lies a more intense currency fluctuation: just over a month ago, the New Taiwan Dollar surged 8% against the US Dollar in a single day, marking the largest increase in 16 months, and even briefly broke through the 30 TWD mark. This exchange rate earthquake, driven by a surge of hot money, exporters’ panic to convert currencies, and the insurance industry’s hedging, unexpectedly reveals a new role for Bitcoin in a highly volatile market.

The Deep Logic Behind the Appreciation of the New Taiwan Dollar: A Shift in Capital Flows

The recent appreciation of the New Taiwan Dollar is by no means an isolated event. It is driven by a combination of three forces:

• Large inflow of foreign hot money: On a single day, foreign investment bought more than 60 billion New Taiwan Dollars worth of Taiwanese stocks, heavily investing in weighted stocks like TSMC and MediaTek, pushing both stock and exchange rates up.
• A wave of dollar selling by exporters: In the face of strong expectations for the New Taiwan Dollar, companies are accelerating their conversion to avoid foreign exchange losses, creating a “stampede effect.”
• Emergency hedging by the insurance industry: Taiwan’s life insurance sector has overseas assets totaling 1.7 trillion U.S. Dollars, and amidst a weakening dollar, they are hurriedly closing out their dollar exposure, instantly amplifying fluctuations.

Deeper issues lie in the shake-up of the Asian dollar cycle model. Taiwan has accumulated substantial foreign exchange reserves through arbitrage of “local currency liabilities and dollar assets” (issuing new Taiwan dollar policies and reallocating to U.S. Treasury bonds). However, Trump’s tariff policy triggered a double decline in the dollar and U.S. Treasury bonds, forcing institutions to reassess risks. QCP Capital pointed out that this could be an early signal of global capital flow adjustments, similar to last year’s fluctuations in the yen due to changes in interest rate differentials.

Fluctuation Showdown: TWD is Surprisingly More “Wild” than Bitcoin

Ironically, the Central Bank of Taiwan rejected incorporating Bitcoin into reserve assets in March due to its “extreme volatility.” But the data reveals a starkly different reality:

• During the surge of TWD from May 2 to May 5, Bitcoin’s fluctuation was only 4.08% (97,749 - 93,913 USD)
• Meanwhile, the TWD against the USD fluctuated over 8%, reaching nearly 3 times the amplitude of Bitcoin.

This contrast has led the public to flood the Taiwan Central Bank’s Facebook with complaints: “Yang Jinlong says Bitcoin has a large fluctuation? Just look at the New Taiwan Dollar!” When the fluctuation of fiat currency far exceeds that of cryptocurrency, the traditional risk perception framework is being overturned.

The industry faces a stark contrast, is Bitcoin becoming an alternative safe haven?

The appreciation of the TWD has created asymmetric impacts on different industries, indirectly driving funds to seek alternative assets:

Beneficiaries: Import and Consumption Industries

• Tourism: The cost of traveling to Japan has significantly decreased, leading to a rise in stock prices for Lion Travel and Phoenix Tours
• Aviation: The reduction in fuel import costs has increased profit margins for EVA Air and China Airlines
• Retail: The gross profit margin for imported goods has expanded for companies like Uni-President.

Victim: Export-oriented Technology Industry

• TSMC: A 1% appreciation of the TWD leads to a 0.4% drop in profit margin
• UMC, Hon Hai: Significant shrinkage of USD revenue when converted to TWD
• Machinery Industry: The Taiwan Machinery Association points out that exchange rates erode export orders

For technology entrepreneurs and investors, holding US dollar assets faces the dual risk of “exchange rate shrinkage + falling US Treasury bonds”. At this time, the fixed supply and decentralized nature of Bitcoin highlight its value. Arthur Hayes pointed out: “The scarcity of Bitcoin gives it a unique advantage in dealing with currency depreciation and liquidity flooding,” which is also the core logic behind his prediction that Bitcoin will reach $250,000 by the end of 2025.

Path Influence: Three Major Channels of Capital Flowing to Bitcoin

How does the fluctuation of the New Taiwan Dollar practically catalyze the demand for Bitcoin? The mechanism has become clear:

• Corporate Hedging Shift: Exporters are no longer blindly converting to USD, instead allocating part of their funds to Bitcoin to hedge against fiat currency risks.
• High Net Worth Individual Asset Restructuring: Reducing holdings in USD bonds and increasing BTC as a non-politically correlated asset.
• Arbitrage Capital Taking Advantage of Fluctuations: Borrowing low-interest loans in New Taiwan Dollar to buy BTC, profiting from cross-border price differences (subject to regulatory risks).

It is worth noting that Arthur Hayes reminds us: altcoins may be absent this round. Most lack product-market fit, and only projects that can generate stable cash flow, such as Pendle and Ethfi, are worth paying attention to.

Future Outlook: The Role of Bitcoin in the Era of Currency Fluctuation in the Asia-Pacific

The sharp question raised by Tao Dong is prompting reflection in Asia: “Is it safe to place large foreign exchange reserves in dollar assets?” As the United States actively undermines the credibility of the dollar through tariff wars, the demand for alternative store of value tools is rising. The characteristics demonstrated by Bitcoin suggest it may play a threefold role:

• Fluctuation filter: Providing low correlation assets during periods of severe fiat currency volatility
• Political risk isolation layer: Not subject to interference from a single government’s monetary policy
• Supplement to payment channels: Avoiding SWIFT system costs, especially suitable for cross-border trade.

Despite being suppressed in the short term by the appreciation of the New Taiwan Dollar (as BTC priced in USD becomes more expensive), in the medium to long term, every new high in fiat currency volatility adds unexpected footnotes to the “robustness narrative” of Bitcoin. When BTC at 3,076,083 TWD is more stable than the USD at 29 TWD, the valuation coordinates of the traditional financial world are quietly being reset.

As of June 18, the market capitalization of Bitcoin has surpassed 61 trillion New Taiwan Dollars. If Arthur Hayes’ prediction of 250,000 USD comes true, it means that BTC priced in TWD will approach 8 million TWD. Regardless of whether this target is achieved, Taiwanese investors are faced with a more urgent choice: in an era where TWD fluctuation has become the norm, should they continue to endure the dual pressure of reduced export competitiveness and asset shrinkage, or should they reconsider that decentralized “digital safe haven”?