Investors have been plowing money into bitcoin since the start of the US and China trade wars

admin August 25, 2019

30 2 minutes read

Investors have been plowing money into bitcoin since the start of the US and China trade wars

FILE PHOTO: Small toy figures seen on representations of virtual Bitcoin currency displayed in front of a picture of China's flag in this illustration, April 9, 2019. REUTERS / Dado Ruvic / Illustration

Many investors have bought gold, a conventional refuge, as the US-China trade war continues to weigh on global growth and sentiment.
People also plowed money into bitcoin during key moments of the trade war, according to eToro data.
Bitcoin trading increased 1[ads1]40% during these important moments.
However, cryptocurrency is still much more volatile than gold.
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It appears that investors treating bitcoin as a haven equivalent to gold given the volume of cryptocurrency trading has increased during the conflict.

There was a 284% increase in bitcoin trading between May 19, 2019 and August 19, 2019, compared to the period between March 22 and June 22, 2018, just before the trade war, according to data from eToro, an online trading platform.

Gold – a popular asset to have in times of uncertainty – increased by a less dramatic 73% over the same period.

Bitcoin trading more than doubled during certain key moments of the trade war, the data showed – usually after tensions eased.

Three examples from this year, highlighted by eToro to Markets Insider in an email, were: [19659012] May 13 – After China retaliated against the United States by announcing a toll on US goods of 60 billion, the number of new gold positions on eToro's platform increased by 108% from the previous day. The number of new bitcoin positions also rose 139%.

25. June – Reports that the US was preparing to postpone extra tariffs on Chinese goods at the meeting between Donald Trump and Xi Jinping had a similar effect. Gold positions jumped 26% against the day before, while bitcoin positions rose 40%.

13. August – After the US delayed imposing tariffs on various Chinese goods – citing health and safety, national security and other concerns – new bitcoin positions rose 123%, more than twice the 60% increase in gold positions.

etoro bitcoin v gold trade war eToro

The number of open positions in both bitcoin and gold has increased as the US-China trade war has escalated and the world's two largest economies have been tolling each other's goods, Simon Peters, an analyst at eToro, told Markets Insider.

The scarcity, utility and intrinsic value of gold are not affected by central banks' interest rate decisions. As a result, the metal has historically served as a haven for investors in times of economic and political turmoil. Peters added.

"By comparison, Bitcoin shares similar characteristics to gold in that there will only ever be a finite amount in existence (21 million), it is decentralized, its price is not affected by inflation, and it has the added advantage over gold with lower storage costs. "

Bitcoin is still a more volatile asset than gold and faces additional risk, Sa Peters said. However, investors seem to be warming up to cryptocurrency as a haven.

"Extreme price volatility, hacks and allegations of price manipulation still weigh on reputation," Peters said. "However, the correlation with gold on the eToro platform may be a sign that the general perception of bitcoin is gradually shifting from speculative direction to a lower risk value relationship."

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