The Feared Trade War Begins But Are Investors Seeking Bitcoin As Their Refuge?
Starting Friday, investors had used up more money out of the stock markets than they have in weeks, and it was mainly due to the trade war that has been sparked between the U.S. and China over tariffs.
While it was expected that investors would turn to Bitcoin to hedge against a trade war, that isn’t likely the case so far with the official news about it that came in this week.
Let’s discuss the Bitcoin Volumes.
For months President Donald Trump has stated that he intended to put tariffs in place. At the beginning of the month, we informed you that the president had called for a 25% tariff and 10% tariff to be put on imports of steel and aluminum, respectively.
He made it abundantly clear that China is the intended target, and that the tariffs are meant to lessen the U.S trade deficit with the country by $50 billion.
Doomsday scenarios came with the March 1st announcement, causing pandemonium and panicked equity investors and traders to sell off their holdings. However, Bitcoin experienced a rally of sorts.
On March 7, Bitcoins’s volume had reached the highest it’s been this month. According to Crypto Compare, it rose to about $74,000. For a lot of people, this indicated that investors may have been fleeing to Bitcoin to hedge against the heightened risk of losses in the equity markets.
On Thursday, Trump made it official as he signed a presidential memorandum directing his trade representative to draw up a laundry list of Census products to which the tariffs would be applied.
The stock market sold off on hearing that news, with the DOW falling more than 700 points on that same Thursday. The bleeding went on to Friday with the market selling off an additional 400 points.
However this time, there were no swells in Bitcoin’s volume. As of Thursday, Bitcoin’s volume was $11,166. On Friday, it fell below $7,000, according to crypto compare. So it’s quite obvious how this pales in comparison to volumes at the beginning of March.
Draining their equity accounts
We’ve informed you about hedge fund manager Brian Kelly who’s developed the reputation of being a Bitcoin bull. He stated that Bitcoin could be used as a hedge against any trade war.
“In this environment, I want to own those things that are deflationary and fixed supply in an inflationary environment. And look at what Bitcoin has done the last couple of days. During trade wars, currencies tend to weaken. This was the case with the dollar, which depreciated in value earlier this month. In past trade wars, investors would hedge with gold, however, now Bitcoin could be an option”.
He then added, “But you know what, now we have Bitcoin. It has a fixed supply. It acts exactly like a hard asset, exactly like a commodity. Generally speaking, you want to own hard assets.”
What’s next?
The list of projects to be affected by the U.S tariffs will be revealed in April. They will take effect following a public comment period.
Meanwhile, China has come out with its own plans to slap U.S. imports with tariffs. The move came Friday, officially sparking the trade war.
Below is a translated statement from the country’s Ministry of Commerce website:
The Ministry of Commerce issued a list of discontinuation concessions for US imports of steel and aluminum products 232 measures and solicited public opinions, intending to impose tariffs on certain products imported from the United States, in order to balance the Aluminum products impose tariffs on losses caused by Chinese interests.
