Chart for BTC/USD (1W)
Bitcoin (BTC) might be the single biggest winner of the US China trade war that has left investors completely perplexed. The stock market is completely clueless as to what Trump might to next to escalate the trade war. This has created a serious trust deficit as far as stock marketing investing is concerned. Prospects for interest rate hikes at this point look promising so investors did not mind pulling capital out of the stock market to put it back in their bank accounts. However, if Trump continues on the same path and the US China trade war escalates further, it will not be possible for the Fed to raise interest rates further.
During times like these, we have seen Gold as the go to asset. However, this time that does not seem to be the case. Gold has lost its appeal and now investors have the option to invest in digital Gold that does not come with the problems of traditional Gold. While mainstream adoption of Bitcoin (BTC) may still take time, Wall Street has already started getting into the game. Why big investors in traditional markets see Bitcoin (BTC) as a valuable investment has more to do than the desire to make astronomical gains. Until recently, big investors in traditional markets were convinced that they were too late to the game so they took the approach of opposing the game. This is because these investors that have created and destroyed markets are not used to being late to a booming market. However, when they realized that it was too late to stop it, they tried to control it by investing in the companies that offer cryptocurrency services.
Chart for BTC/USD (1D)
All of that seemed to work well till the debate was confined to cryptocurrencies. However, now investors realize that the problem is bigger than that. It’s not just about Bitcoin (BTC) or the crypto market; it is about uncertainty surrounding the US China trade war and the emerging currency crisis, the first signs of which we have already witnessed in Turkey, Iran and Venezuela. This means that these major investors will not just invest in crypto businesses but they will also have to buy the actual coins to hedge against a global currency crisis or an escalated trade war between US and China.
The chances of the US China trade war escalating further are very real despite the fact that it has done a lot of harm to both large economies. This is not just some foolish arm twisting or an egoistic pissing contest. All of this started when China’s export potential became a threat to the United States as it meant that China will soon surpass the United States in terms of GDP and could thus become the global superpower. In 2017, the GDP of US was $19.4T whereas that of China was $12.0T. However, the rate at which China is growing, by extrapolation, China is expected to outrank US in terms of GBP as early as 2028. Furthermore, China is trying to expand its exports reach with its One Belt One Road initiative to which it sees the US as a big obstacle. The fear on both sides is very real and this clash between two world powers on a major scale will continue to affect most markets for the foreseeable future. In such circumstances, major investors as well as the general public across the globe will turn to Bitcoin (BTC) to hedge their bets as well as to protect against economic setbacks and desperate fiscal policies adopted by failing governments in the years to come.