Even by the standards of the Trump administration, the latest trade warfare escalations with China are kinetic.
After declaring he had been slapping tariffs on the remainder of China’s exports to the US, China reacted by allowing their money to fall below a crucial level, seven yuan to a dollar, a level that hasn’t been seen as the GFC.
We can debate for weeks the trade policy adopted by the US, but the problem stands, and the consequences of the trade policy which the rest of the planet has to take care of. While news about currencies and shares were spreading all over the world, the winners of this chaos were only 2: gold (up 7% in a week) and also bitcoin (18% ).
Gold is a traditional secure haven asset. Though the gold standard has not been something for nearly fifty decades, every nation on Earth still retains a stash of gold somewhere around the assumptions, only in case things go really fruity. China has purchased 70 tons of gold since December.
For investors, purchasing gold is basically a bet that things are trending towards instability. If the value of this world’s currencies are in freefall, you may normally rely on gold to manoeuvre from another direction.
Thus, is Bitcoin the new gold?
Well, it is complex.
On the one hand, this is exactly what Bitcoin was developed to be: a manipulation-resistant option to centralised fiat currencies.
When the whole foreign exchange market begins looking shaky, bitcoin could be depended on to comply with the very same principles it always has: 21 million Bitcoin, published on a trusted schedule that lasts until 2150.
On the flip side, bitcoin is considered a high-risk investment. So if the shit really hits the fan, money will likely rush into reputable safe havens: US Treasury bonds and gold.
This could cause a sudden and intense move against bitcoin since the world’s desire for speculation dries up. However, if the dust settles, people are going to be on the search for undervalued assets and bitcoin can develop into an attractive hedge against political doubt.
Whatever happens, it is difficult not to believe we might be approaching a threshold second for cryptocurrency. But if you think bitcoin signifies a radical event in the history of cash, then all you can do is sit HODL and revel in the fireworks.
Who looks into crypto?
We tend to consider cryptocurrency as the state of digital native twenty-somethings, but based on a new study from Grayscale Investments, the people most inclined to direct the cryptocurrency revolution are middle-aged, suburban mums and dads seeking to diversify their portfolio.
While they found that 21 million Americans would look at investing in crypto, it was the over-representation of parents (70%), the average age (45) and the almost equal interest from men and women (57% to 43% ) that is really interesting.