Trade wars between the United States and China are shaking the world economy. How will it impact Bitcoin?

On Friday, July 6, 2018 Donald Trump introduced 25% tariff on the import of goods from China in the name of “combating China’s economic aggression.” According to the President of the United States, this should hit China’s economy by more than $60bn. In response, the Chinese authorities take additional measures to protect the intellectual property of foreign companies investing in the China’s economy. In addition, China also introduced reciprocal tariffs on goods imported from the United States.

According to many experts, both sides will come out of this war with multi-billion losses. Trade war will affect such sectors of the economy as consumer goods, agriculture, technology firms, education, aircraft construction and services.

Companies manufacturing goods in China and the US have a global market coverage, including automakers, electronics and food producers, and the trade war makes them economically unstable. Thus, trade wars can damage the safety of global production chains.

How will the trade war between the United States and China affect Bitcoin?

Against the backdrop of a sharp decline in the prices of shares of Chinese and American companies, it is rather odd to observe the growth of Bitcoin, which – let’s be honest! – in the last few months has mostly only declined in price. Why is this happening? There is a logical explanation for this.

Traders around the world are afraid to trade in the traditional currencies because of the destabilization of the world economy, so there is predicted a sharp transition of many traders into Bitcoin. People will stop having their savings in USD or Yuan, and investors will lose interest in them too, because both currencies can collapse rapidly, while digital money will allow to keep operating volumes in case of the fall of traditional markets. Bitcoin will be the last currency in the world to see a negative impact by this trade war, since this is a digital currency not tied to the material reserves of any country.

To add to the growth, regulators from Japan and South Korea have expressed their unwillingness to impose new sanctions on cryptocurrencies.

Based on the information given above, we believe that the following will happen: soon, the Bitcoin network will see an increase in the number of trades, which will lead to an increase in capitalization and Bitcoin price. For example, three days after the announcement of the war, the Bitcoin price grew by more than $500, so the process of Bitcoin growth has already started. Thus, in Bitcoin, more transactions will take place, and they have several significant advantages over transactions in traditional currencies (for example: absolute transparency of all operations and lack of need to convert money from one currency to another, wasting money on extra fees for international purchases).

Because of this, the fortune now seems to be on the Bitcoin’s side. And after the stabilization of the world economy (but who knows when it will even happen) the probability of Bitcoin declining again becomes minimal. Of course, if we see fast payments by then (read our previous article on this topic)

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