Global Unrest is Fueling a Rally in Cryptocurrencies
The fear in the market is palpable.
While trade war concerns seem to be cooling, the threat of war with Iran remains.
Although China plans to send delegates to Washington to finalize an initial trade deal, past history has suggested that both sides of the table can back out of portions of the deal without warning.
Even Janet Yellen thinks the US-China trade war isn't over, and that a tech fight risks dividing the world, citing unresolved tensions (Source: CNN). "These issues are going to be quite difficult to deal with and will have very significant consequences for the global economy," she said.
So, it comes as no surprise that investors have been fearful of the market.
Herd instincts are kicking into overdrive over the trade war, and fears of a global recession.
While many investors are fleeing stocks, many are also heading toward the “safe havens” of cryptocurrencies. In fact, since the trade war flare-up began, Bitcoin has exploded from $7,000 to nearly $14,000 on tumultuous fear. More recently, it has climbed from $6,700 to nearly $9,000.
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"While the risk asset drawdown is still in its very early stages, Bitcoin is on the rise as these risks are just beginning to show up in other asset and currency prices. Since Trump first announced the tariff hike in May, Bitcoin has generated a cumulative return of 104.8% through August 7, versus an average of -0.5% for the twenty other asset classes, markets, and currencies below during the same period,” note analysts at Grayscale Investments, as quoted by CCN.
As we noted previously, analysts argue Bitcoin is a Sold 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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