The Newest Safe Haven in an Intensifying Trade War

The trade was has become unrelenting with no end in sight.

In early September 2019, days after China said they would not retaliate, they retaliated. 

President Trump followed through with his promise to tack on 15% in tariffs on $110 billion worth of imports. And China responded by rolling out higher tariffs in stages on nearly $75 billion worth of U.S. goods.

“China’s determination to fight against the U.S. economic warmongering has only grown stronger, and its countermeasures more resolute, measured and targeted,” according the Xinhua News Agency. One thing that “White House tariff men should learn is that the Chinese economy is strong and resilient enough to resist the pressure brought about in the ongoing trade war.”

Unfortunately, neither side is likely to budge.

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Cryptocurrencies Sought as Safe Havens

While there are plenty of losers in the war, including technology, retailers, global growth, and the average consumer, one of the standout opportunities have been cryptocurrencies. In fact, since the trade war began, Bitcoin has rallied from $8,212 to $10,126 – a 23% move on sizable volume spikes, as gold rallied about 20%. 

History also proves that investors are aggressively buying cryptocurrencies in the trade war.

According to eToro, as highlighted by Business Insider:

  • On May 13 after China retaliated with a tariff hike of $60 billion worth of U.S. goods, the number of new gold trades popped 108% in a single day on eToro’s platform.  However, the number of new BTC positions rocketed nearly 140% over the same time.
  • On August 13 after the U.S. delayed imposing tariffs on Chinese goods, new BTC purchases were up 123%, as compared to a 60% rise in gold purchases.

After China retaliated again on September 1, 2019, gold prices rallied from a low of $1,503 to $1,529. Meanwhile, BTC jumped from a low of $9,600 to $10,154 in the same time frame.

Analysts argue 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 Crypto Compare 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.

Should the trade war continue to intensify, we could see higher highs for major coins.

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