As the trade tension between the US and China continues to put pressure on conventional markets, analysts are beginning to recognize the benefits it could have on Bitcoin. According to at least a few of them, it could drive the price of the cryptocurrency to significant highs.
The tension between the US and China is causing quite a turmoil amid traditional markets. The correlation between the US Dollar and China’s yuan is getting more and more worrisome. At the time of this writing, one USD is worth approximately 6.9 yuan which is alarming, to say the least. A weaker yuan can cause investors to flee China which would lead to large outflows of capital. Moreover, Chinese companies which have USD-denominated debt are going to find themselves in a position where their loans have become more expensive.
The trade war is also causing pain for US companies. The S&P 500 is down about 3 percent since the beginning of the month.
It is this international environment that could propel Bitcoin, as more investors are seemingly looking for a safe haven amid the growing tension.
According to Christopher Vecchio, a senior currency strategist, it would be challenging for Bitcoin to return to $20,000 in the near term. However, the analyst also said that this could happen if the yuan continues to weaken.
In an environment where the global financial system looks like it is potentially at risk because of the world’s two largest economies going at odds, people may be looking for alternative avenues to find ways to circumvent the capital controls being put in place to move their money around without the Chinese or U.S. government taking stock of it. – Said Vecchio.
Vecchio is not the only one who sees Bitcoin as a hedge against the tumbling markets. Popular Bitcoin analyst Oliver Isaacs has also weighed in on the matter. However, he’s being more optimistic and more precise with his targets.
According to Isaacs, Bitcoin “has the potential to hit $25,000 by the end of 2019 or early 2020.” He has also outlined similar drivers for this.
There are multiple drivers behind the recent resurgence. There are geopolitical, technological and regulatory drivers. The net effect of the trade war between the US and China has led to a sudden interest in bitcoin as a hedge on investments. – Said Isaacs.
Meanwhile, Bitcoin is currently trading slightly below $8,000, up 3 percent on the day. The cryptocurrency is attempting to recover after its violent decline earlier this week which brought its price to around $7,600.
As Cryptopotato reported, Bitcoin found support in the area of around $7,500 and the bulls are seemingly back in town.
This article was first published on: Jun 7, 2019.