The United States and China have been locked in an increasingly escalating trade war since 2018. As this conflict is changing from tariffs to technology, a wide variety of products and industries could possibly face the consequences in case of another big escalation. In this article, we’ll take a look at the current situation of the US-China trade war in order to analyze if this ongoing event can affect cryptocurrencies and determine if cryptocurrencies can benefit in any way from the trade war the two countries are engaged in.
How Did the US-China Trade War Begin?
Even before he stepped into the White House, Donald Trump has been complaining about how China’s trading practices have had a massively detrimental effect on the US economy. After launching an investigation in 2017, the US imposed tariffs on billions of dollars worth of Chinese goods and products in 2018. Shortly after, the Chinese government responded with tariffs on over $110 billion worth of US goods and products, starting the largest trade war in economic history. United States imposed tariffs on a number of Chinese industrial and consumer goods, while China has targeted US products such as coal, medical equipment and chemicals.
While this conflict has affected several industries in both countries, some markets have been performing without any issues or restrictions. Online businesses, such as shopping websites, entertainment platforms and online casinos, have been untouched by the situation and are as stable as they can be. Betfair NJ for example is just one of many online casinos which are allowed to operate all over the world, including the US. In addition to this, both Amazon and AliExpress have continued to perform without any major setbacks.
The Question of US Debt
Ever since this trade war started, there has been a looming concern that China might use its holdings of US bonds to flood the market and destabilize the US. China holds more than $1.1 trillion worth of US debt, an amount that could have catastrophic consequences on a global scale if China decides to large-scale sell. This is often called the ‘nuclear option’ since neither countries would draw positives out of this scenario.
Can the Trade War Affect Cryptocurrencies?
Cryptocurrencies operate as decentralized access independent from any government or organization. Since there can’t be one governing body that controls the production and flow of cryptocurrencies like it can be done with regular currencies, it’s very hard to predict how specific cryptocurrencies will perform under the current circumstances. While this autonomy might seem scary to those who are looking to get into the crypto world, it also has a positive side. Cryptocurrencies are basically immune even to the worst possible effects and outcomes of this trade war.
During the time when the price of gold is rising slower than ever, cryptocurrencies may serve as a perfect shelter for those who want to protect their finances from the unpredictability of the global economy. As a decentralized currency, crypto coins are the new ‘digital gold’, as they are completely independent and cannot be controlled by anyone. This means that no matter what happens on the global financial market, cryptocurrencies should stay unaffected. We will take Bitcoin, for example, since it is the best-known and most valuable cryptocurrency on the market.
Could Bitcoin Skyrocket Again?
The most likely scenario in which cryptocurrencies could experience another massive boom as they did in 2017 is if national treasuries decide to opt-in for crypto coins such as Bitcoin and use them as alternative stores of value. This would directly push up the price of cryptocurrencies, so much so, that it could cause an even bigger raise than before.
While there are no telltale signs that this scenario might happen in the near future, due to Bitcoin’s durability, ease of transfer and the market cap which comes naturally with every cryptocurrency, Bitcoin and other crypto coins can be considered as a superior store of value. 2019 has already seen several countries increase their demand for Bitcoin, so it will be very interesting to see how the entire situation shapes up in the following months.