US President
Donald Trump has said that he will impose a 10 percent tariff on $300 billion
worth of Chinese goods. Hence, the trade tensions between Washington and Beijing
continue to build. This had an immediate effect on traditional markets, most of
which tumbled in response, as investors are seemingly turning to Bitcoin and
gold as hedges.
Trump
Does it Again
In a series
of tweets, the US President, Donald J. Trump, announced that he would place yet
another 10% tariff on the remaining $300 billion worth of goods which China
exports to the US.
He said that
US representatives had just returned from China where they had “constructive
talks” in regards to a future trade deal between the two largest economies in
the world. However, according to Trump, China failed to live up to its earlier
promises by not buying agricultural products from the US in sufficient quantities.
Moreover, the country continues to sell fentanyl to the US, because of which
“many Americans continue to die.”
The US had
previously hit another $250 billion worth of Chinese goods with a 25% tariff.
In response,
traditional markets tumbled. The S&P 500 lost upwards of 60 points shortly
after the news broke.
Additionally,
the Dow Jones Industrial Average (DJIA) also tumbled, losing more than 540
points after the announcement.
As the
Financial Times noted, it’s not just US markets which tumbled. European stocks
also joined the selloff as Germany’s exporter-led Xetra Dax 30 fell upwards of
2 percent. London’s FTSE 100 is down 1.5 percent as well.
Bitcoin
as a Safe Haven
It appears
that investors might have turned to Bitcoin as a hedge against the tumbling
traditional markets.
The world’s
largest cryptocurrency by market value gained upwards of $700, representing a
6% increase, in the past 24 hours alone. Currently trading at above $10,500,
Bitcoin possesses a market cap of almost $188 billion.
It’s not the
first time this has happened, though. Back in May, when Trump announced that he
intended to impose tariffs on Chinese goods, traditional markets reacted in
pretty much the same way.
According to
a popular Bitcoin analyst and blockchain investor, Oliver Isaacs, the trade
tensions between the US and China could be one of the factors that propel
Bitcoin further as investors see it as a hedge on their investments.
The net effect of the trade war between the US and
China has led to the sudden interest in bitcoin as a hedge on investments.
On another
note, gold is also up 1.10% today, as it’s increasingly considered one of the
best safe haven investments in times of economic instability.
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