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The effects of the US-China Trade War on Bitcoin.

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On May 10, 2019, Donald Trump, the U.S. president began a trade war with China and Since the news, Bitcoin has experienced an uptrend its price.

Donald Trump Begins Trade War with China

On May 10, 2019, Donald Trump, the U.S. president began a trade war with China after his announcement that $200 billion worth of Chinese goods imported into the U.S will no longer have a tariff of 10 percent, but 25 percent. Since the news, Bitcoin has experienced an uptrend its price.

A number of analysts such as Ed van der Walt, a Bloomberg reporter put one and two together to arrive at the possibility that the recent surge in Bitcoin’s price is as a result of the trade war. According to him, the increase in tariffs could lead to geographic price arbitrage and as such, smugglers may take advantage of the opportunity to illegally import these goods into the countries.

Ed van der Walt also hinted that these smugglers were probably the ones who began to amass Bitcoin to make their feat possible. This is because, from barely around $6,000, the top cryptocurrency by market cap surged to above $6,000 on the same day the news was made.

 

Bitcoin Can Benefit From US/China Trade War

Asides from the reporter, cryptocurrency can benefit from the trade war between China and the United States. This is because while goods and certain types of assets can be negatively affected by a trade war, the reverse is the case with Bitcoin. Its decentralized nature means that it is not controlled by the central bank or government.

As a result, investors who may be fearful of the value of the U.S. dollar or Yuan falling may seek a safe haven and in this case Bitcoin or any other cryptocurrency. It has been the case in Venezuela with the decline in the value of the Bolivar, and the same can be said for Turkey.

Barry Silbert, CEO, and founder of Digital Currency Group while commenting on the US/China Trade war and its impact on Bitcoin stated on May 20, 2019, that Bitcoin is serving as a non-correlated asset and is living to the expectations that it can withstand the problems in the global economy. The CEO cited two examples of these when he said: “If you look at over the past five years—when ‘Brexit,’ happened, Bitcoin went up. When ‘Grexit’ happened, Bitcoin went up.”

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Written by Ruchi Ramaswamy

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