I guess some will be wondering if the current trade war between the U.S. and China, have something to do with the recent months Bitcoin price movement and if also can be a positive indicator into maintaining the current price levels.
First of all we need a logical hypothesis as of why a trade war could have cause bitcoin’s price to go up. So let’s address the problem. A trade war makes national assets vulnerable. In the current trade war U.S. is trying to cancel or have already canceled, deals made with Chinese companies. Essentially cutting economical ties and reducing the flow of money, in this situation dollars, into China.
Identifying the problem of a Trade War
The problem is that even if the U.S. government continues the bans, some of the businesses in the U.S. will still want to do deals with Chinese companies or Chinese small businesses because they are cheaper and also faster in terms of production. But to transact now they will need to transact in a different way.
The only options are, under the table money transferring through off-shore companies or good old Bitcoin. If that’s the case what kind of businesses could do that? Some examples we can mention are businesses which are using programmers, internet marketing businesses, e-shops and I can make it very long but you get the point.
So now we have a hypothesis with high enough probability to set it as a constant to cross reference it with various variables, and compare if the results are close to what we see today.
The ability to transact without borders
Because Bitcoin isn’t owned or operated by either U.S. or China, and also neither countries is considering it a national asset, it makes it a safe haven for investors, consumers, and various kinds of institutions, who may be feeling that a national currency like the dollar or the yuan is starting to look a little shaky.
So now if someone wants to conduct business deals and he is relatively used to technology, he could use Bitcoin to do it. Now for him it makes sense to transact in such a way that no one can do anything.
This reason by its own could have caused the price pump without needing other variables into play. And as the market stays around the same in terms of marketcap and price in long term, it could also mean a validation of the above theory. Also further escalation in the trade war could potently mean a new price pump.
So only time will tell if the hypothesis based on why and how the trade war could have been be the “Bull” of our case, the same “Bull” which will also sustain the current price levels.
Conclusion of our hypothesis on Trade War
In all wars there there are some standard outcomes that can happen. In a war there is always one winner and one loser. If the war is sort term, and decided within the next few years the winner is the one with the most benefits. If it is long term war, both sides will lose a lot making winner the one who lost the least, and no one wants to go down to this path. This is not different in a trade war that involves economy, technology and business deals.
As for what we know for sure, is that China leads the way in terms of mining Bitcoin. Potentially this can be China’s ace in the hole to win the Trade War in short term. But also could be proven dangerous for Bitcoin overall, knowing that if Chinese miners co-operate, they can be a potential threat to decentralization Bitcoin offers.