Trade War Just Triggered a Cryptocurrency Boom
The trade war just got a bit worse.
And there doesn’t seem to be an end in sight. Just days after the latest China-U.S. meeting failed, President Trump shocked the world with a 10% tariff on the remaining $800 billion worth of Chinese imports. If that new tariff takes effect on September 1, 2019, every Chinese import into the U.S. will be subject to levies ranging from 10% to 25%.
In retaliation, China halted all imports to U.S. agricultural products.
“The leverage that China has is its large agricultural purchases,” Darin Friedrichs, a senior analyst at INTL FC Stone’s Asia commodities division, as quoted by Bloomberg. “This does affect U.S. farmers and the rural U.S. voting base that’s normally in support of Donald Trump. If they hit back before the election, that’s the obvious way to retaliate.”
China also allowed its currency to sink to a decade low to help cushion the blow.
Cryptocurrencies are Performing Like Safe Havens
Learn How to Spot Unique and Predictable Patterns in Cryptos
As we’ve seen with all trade war escalations over the last year, cryptocurrencies have been performing like safe havens. In fact, since President Trump’s latest 10% tariff announcement, Bitcoin (BTC) for example jumped from $10,709 to $11,780.
In fact, on the day China retaliated, BTC soared 10%, or $1,091.
Analysts argue that Bitcoin is a Solid Hedge against Uncertainty
“Bitcoin has many use cases and one of the most important is as a form of digital gold,” Charles Hayter, CEO of CryptoCompare said, as quoted by CNBC. “We have seen bitcoin jump before on macro uncertainty as it becomes a conduit and flight-to-safety asset.”
"Bitcoin has the ability to act as a safe haven asset, and signs of a further deteriorating trade war with China could have been the primary catalyst to drive up bitcoin prices following Trump's tweet," said John Todaro, director at Trade Block, as quoted by Forbes.
Unless we see an end to the trade war, or Federal Reserve intervention, this could very well be the start of a sizable cryptocurrency boom. Stay tuned for more.
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