Bitcoin Turning Into A New Gold With Recent US-China Trade War

Picture illustration of a small toy figurine and representations of the Bitcoin virtual currency
An image representing Bitcoin mining in front of a flag of China, one of the BTC's biggest supporters. Bitcoin is expected to go on another run. (Photo: REUTERS/Dado Ruvic)

The current trade conflict between the US and China will soon reach the US bond market with China ending up selling off US treasuries. This move, according to experts could send Bitcoin and other digital and crypto currencies to new highs.

It started in tariffs, but now it appears that the US and China trade war has already spread in the technology sector. This has rather benefited the Bitcoin, as the crypto currency is now the new gold. Since the start of the year, the digital currency has grown by 132.69 percent. This was followed by several other major currencies.

While the Bitcoin is soaring, the gold has remained almost flat, which triggered some of the fearful investors to seek shelter in digital or crypto currencies. So far, no one knows when exactly this war or the rise of digital currencies is going to end. But, it all dependent on the reach of the trade war and if it's going to expand to the US bond market.

For several years, the US Treasuries have served as the store of value during global uncertainties triggered by trade wars and several other geopolitical events. It is for this reason that the US Treasuries have been soaring along with Bitcoin and other digital currencies. Additionally, the US bond market served as a refuge for the surplus dollars of countries with trade surpluses with the United States.

Actually, China has parked more than $1 trillion in the US Treasuries as a portion of the country's dollar management system. However, when the trade war started to escalate, Beijing started selling them off. Founder and CEO of Yewno Ruggero Gramatica said that the current state could be bullish for Bitcoin and for competing Treasuries. Yewno is the creator of the Knowledge graph that creates actionable knowledge from today's wide range of information.

According to the CEO when the US bonds sell-offs, the money will flow to other treasury bonds. At present, the Japanese bonds and the German bonds are the two major rivals of the US Treasury in terms of government bonds. But, both bonds, compared to the US bonds, have a low-yield return. The founder also noted that gold is another alternative but it has much lesser liquidity and return along with high carrying costs.

Gramatica also underlined the Bitcoins. He said that Bitcoin could serve as an alternative store of value for the flow of surplus money, which could mean pushing the value of the prices of crypto currencies up. Among alternatives, Gramatica noted that Bitcoin and other digital currencies are much superior stores of value because of ease of transfer, predictable inflation, durability, and limited supply.

© 2019 Business Times All rights reserved. Do not reproduce without permission.
Sign Up for Newsletters and Alerts