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US-China trade war spurs interest in Bitcoin

UNITED STATES, WASHINGTON (OBSERVATORY) — Along with gold, investors are actively buying bitcoin against the backdrop of a tougher trade war between the US and China, Business Insider reports citing data from the eToro platform.

Investors are actively buying bitcoin amid a tighter trade war between the US and China. Over the past 4 months, due to the escalation of the conflict between the two superpowers, the number of transactions with the first cryptocurrency on the eToro platform has grown by 284%. Over the same period, the number of transactions with gold increased by 73%.

It is curious that the daily percentage change in the number of positions in bitcoin is almost always higher than that of gold, which indicates that there are a significant number of people who are ready to immerse themselves in the cryptocurrency market subject to the appropriate conditions.

Synchronized activation of trading activity often occurs against the background of important events in the international economy. It is possible that investors began to perceive bitcoin as a protective asset.

Assets whose value is largely unrelated to the whims of central banks are generally considered safe in times of economic uncertainty. Although it is worth noting that bitcoin is more volatile than gold, which means it is a more risky asset, but investors seem to be starting to feel much warmer about the first cryptocurrency.

According to eToro analyst Simon Peters, gold, being a scarce asset with usefulness and intrinsic value, has never been affected by changes in central bank rates. As a result, the noble metal has historically served as a refuge for investors during times of economic crisis.

“Bitcoin has similar characteristics to gold in the sense that there will only ever be a limited number (21 million) of tokens, the cryptocurrency is decentralized, and the price is not subject to inflation and has an additional advantage over gold in the form of lower storage costs.” , says Peters.

The analyst admitted that a number of factors continue to hamper the generally accepted adoption of Bitcoin as a reliable hedge, noting that its reputation is still overshadowed by the alleged price volatility, alleged market manipulation and the prevalence of hacker attacks in the cryptocurrency sector.

So far, 2019 has been a time of great economic uncertainty. This year alone, the US Federal Reserve cut interest rates by 0.25%, Germany’s GDP fell in the second quarter, and China could be on the verge of a debt crisis. Because of this, some analysts believe that another global recession could happen on the horizon, which could encourage investors to invest in experimental assets such as bitcoin.

Recently, amid Beijing’s intention to introduce tariffs on American goods worth $ 75 billion, global indices reacted with a decrease, while Bitcoin immediately rushed up.

Earlier in May, after China’s retaliation against the United States in the form of $ 60 billion worth of goods, the number of open gold positions on eToro grew by 108% during the day. During the same time, bitcoin positions grew by 139%.

In June, after reports that the United States were postponing the introduction of additional tariffs on Chinese goods after the meeting of Donald Trump and Xi Jinping, a similar, although less pronounced effect occurred: positions in gold and bitcoin increased by 26% and 40%, respectively.

In August, positions in bitcoin grew by 123%, and in gold – by 60% amid news that Washington postponed the introduction of new tariffs.

According to the results of a survey conducted by BabelFinance, more than 30% of Chinese investors are confident that Bitcoin will overcome the $ 30 thousand mark in the next 12 months. Bitcoin is the most popular asset among the Chinese, however, many people also keep Ethereum (57.8% of respondents), USDT (50.6%) and EOS (41%).

Brian Kelly, founder of BKCM LLC, an investment firm, shared a short-term bear forecast on the Bitcoin exchange rate in a conversation with CNBC. Kelly argues that market participants need to monitor the number of active bitcoin addresses as the main indicator in predicting further price movements.

Due to the drop in their number recently, the analyst recommends preparing for a decrease in the rate of bitcoin. However, when this happens, investors will have a unique opportunity to build positions.

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