China’s Taiwan Threat Puts $10.6 Trillion at Risk, Next Trigger for Bitcoin Rally?

China resumed large-scale military operations near Taiwan on March 15, sending 26 aircraft and 7 naval vessels toward the island in the largest show of force in weeks.

The activity follows an unusual two-week lull in Chinese flights near Taiwan’s Air Defense Identification Zone (ADIZ). Analysts are now reassessing the economic risks of a Taiwan conflict and what it could mean for digital assets.

Why Taiwan Carries $10 Trillion in Global Risk

Taiwan sits at the heart of the global semiconductor supply chain. The island produces more than 60% of the world’s chips and over 90% of the most advanced processors used in artificial intelligence (AI), data centers, and smartphones.

Taiwan Semiconductor Manufacturing Company (TSMC) alone supplies firms like Apple, NVIDIA, AMD, and Qualcomm.

Bloomberg Economics modeled five potential scenarios for a Taiwan conflict earlier this year. In the worst case, a full-scale US-China war over the island could cause approximately $10.6 trillion in global losses.

That figure equals roughly 10% of global gross domestic product (GDP) and would dwarf the combined damage from the 2008 financial crisis and the COVID-19 pandemic.

Even a blockade scenario, short of full war, could slash global GDP by an estimated 2.8% in the first year. Supply chains across electronics, automobiles, and industrial equipment would face immediate shortages if Taiwan’s chip production stopped.

Bloomberg Economics Taiwan conflict GDP impact chart. Source: Bloomberg

China is the world’s second-largest economy and a central manufacturing hub. Sanctions or trade restrictions following a conflict would further disrupt global production and compound the financial damage.

The timing of the latest military activity adds another layer of tension. The resumed flights came as global risk was already elevated due to the US-Iran conflict and instability across the Middle East.

Taiwan’s defense minister, Wellington Koo, cautioned against reading too much into short-term fluctuations in Chinese air activity.

However, he stressed that naval vessels continue to circle the island daily.

Bitcoin Outperforms as Geopolitical Stress Builds

While traditional markets have struggled with the dual weight of Middle East and Asia-Pacific tensions, Bitcoin (BTC) has shown notable strength.

The pioneer crypto by market capitalization has gained roughly 7% since the Iran conflict escalated on February 28, outperforming the S&P 500, Nasdaq 100, gold, and silver over the same period.

BTC, Gold, SPX, NASDAQ, and Silver Price Performance. Source: TradingView

BTC was trading for $73,916 as of this writing, approaching a six-week high after bouncing approximately 25% from its February low of $60,000.

Bernstein analyst Gautam Chhugani pointed to Bitcoin’s structural properties as a key factor in its resilience.

“Maybe it takes a physical conflict to realise Bitcoin remains the most portable (cross-border), digital and liquid asset with no counterparty risks,” wrote Holger Zschaepitz, citing Gautam Chhugani.

Bernstein noted that roughly 60% of Bitcoin’s supply has not moved in over a year. As more BTC flows into ETFs, corporate treasuries, and long-term wallets, short-term selling pressure may matter less during periods of stress.

US spot Bitcoin ETFs recorded three consecutive weeks of inflows totaling more than $2.1 billion, nearly reversing year-to-date outflows.

Kiyosaki Warns of Historic Bubble, Predicts $750,000 BTC

However, not all voices frame the macro environment as a slow build. Author and investor Robert Kiyosaki warned that the global economy is approaching what he called the biggest bubble in history.

“When the bubbles go bust, I predict gold will hit $35,000 an ounce one year after the gold bubble goes pop… I predict Bitcoin will hit $750,000 a coin a year after the crash,” wrote Kiyosaki.

Kiyosaki also projected Ethereum (ETH) at $95,000 within a year of a crash. He did not specify a trigger but said the timing is near.

These predictions lack consensus support. However, the convergence of rising military pressure around Taiwan, ongoing conflict in the Middle East, and persistent macro fragility has amplified the debate around Bitcoin’s role during systemic stress.