The United States, China and the fallout of their escalating trade war means Bitcoin is a perfect storm.
Bitcoin (BTC) price has staged a remarkable rally in recent days, but the reasons behind it could mean higher prices stick around much longer.
With BTC/USD now at $12,200, here are the main reasons the cryptocurrency industry considers lie behind Bitcoin’s latest surge higher.
1. Global stocks are tumbling
As Cointelegraph continues to report, the ongoing impact of the United States-China trade war is increasingly considered a boon for Bitcoin.
On Tuesday, as tensions continued, stocks around the world showed considerable strain. As serial investor Tim Draper noted, the Dow Jones and Nasdaq fell by 2.9% and 3.4% respectively. For the Dow, it was the worst trading day of the year.
At the same time, Bitcoin gained 3.2%, the latest in a series of rebounds which ended several weeks of bearish sentiment. Just a week ago, BTC traded closer to $9,500.
2. Investors are waking up to Bitcoin as a hedge
Current price performance is fuelling attitudes that Bitcoin is becoming increasingly useful as a hedging instrument.
As cryptocurrency and blockchain lawyer Jake Chervinsky noted on Tuesday, this quality is an essential use case, with Bitcoin designed to reduce dependence on the centralized financial system.
“Bitcoin is doing exactly what it’s designed for today,” he summarized.
His comments were echoed on mainstream media, with the CEO of consultancy firm Agecroft Partners telling CNBC Bitcoin’s hedging properties will make it a firm favorite for funds in future.
3. Bitcoin profits from fiat currency blame games
As part of the trade war, the U.S. this week described China as a currency manipulator. The accusation came after Beijing significantly changed its policy of supporting the yuan, allowing it to slide against the dollar.
This in turn allowed China an unfair competitive advantage in global trade, treasury secretary Steven Mnuchin claimed. China retaliated by warning the U.S. was “deliberately destroying international order.”
For the average investor, an alternative thus makes perfect sense, Hayman Capital Management founder Kyle Bass explained to mainstream media.
“If you’re in Asia and China and you’re in a closed currency system, or if you’re in Hong Kong and you can’t seem to get a big conversion of Hong Kong dollars to U.S. dollars what are you going to buy?” he said in an interview with Yahoo! Tuesday.
As Cointelegraph reported, Jeremy Allaire, CEO of crypto payments firm Circle, also thinks the situation is spurring on Chinese investors to interact more with the cryptocurrency market.
“Humanity has now created a non-sovereign, highly secure mechanism to store value that can exist anywhere the internet exists,” he told CNBC Monday.
Source: , CoinTelegraph
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