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Safe Haven? 284% Surge in Bitcoin Trades Over Last 3 Months as US & China Trade War Escalates

TL;DR: According to cryptocurrency exchange eToro, bitcoin trading surged hundreds of percent over the last three months, coinciding with increasing bellicosity in an ever-escalating trade war between the United States and China. It’s prompting some analysts to wonder if cryptocurrency could be a financial safe haven even despite its notorious price volatility.    

Surge in Bitcoin Trades Over Last 3 Months as US & China Trade War Escalates

Reporter Yusuf Khan characterized the phenomenon as investors “plowing money into bitcoin since the start of the US-China trade war.” Traditionally, that so-called safe haven position is thought to be the purview of a barbarous relic, gold. Call it a hedge or even a refuge, precious metals are considered a smart way to diversify portfolios in times of grave economic uncertainty.

Trade War

Cryptocurrency has been touted as a modern version of that scenario, but evidence is lacking as to such an assertion being little more than enthusiasts’ fervent dream, wishful, magical thinking. The current trade war between the United States and China, however, might be testing both legacy investment theory and Bitcoiners’ claims.

“Investors appear to be treating bitcoin as a haven asset similar to gold, given the volume of cryptocurrency trading has increased during the conflict,” Khan insists. “There was a 284% surge in bitcoin trades between 19 May 2019 and 19 August 2019, compared to the period between 22 March and 22 June 2018 just prior to the trade war, according to data from eToro, an online trading platform.” Gold has risen too, but nowhere near those numbers.

Three Examples

Key moments this year put forward by eToro include mid-May, when retaliation by China meant it slapped $60 billion in tariffs on the US, causing bitcoin positions to jump 139%. In late June, Trump hinted at delaying tariffs against the Chinese during a meeting with leader Xi Jinping, which the exchange claims resulted in a 40% rise in bitcoin positions. Around the middle of the present month, the US once again postponed tariffs, and “new bitcoin positions soared 123%, more than double the 60% rise in gold positions,” Khan cites eToro as confirming.

Trade War

It’s hard to know how meaningful “positions” are, but more mainstream analysts are watching cryptocurrency prices like never before, trying to make sense of movements. That’s extremely tough, considering the relatively low liquidity and rampant manipulation in digital asset speculative markets.

The US president, on the other hand, ratcheted-up his rhetoric in recent days after China piled on a reported $75 billion worth of new tariffs. Trump tweeted, “We don’t need China,” and demanded, “Our great American companies are hereby ordered to immediately start looking for an alternative to China,” later suggesting he could do so based upon the “Emergency Economic Powers Act of 1977.”

DISCLOSURE: The author holds cryptocurrency as part of his financial portfolio, including BCH. 

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