- 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
- 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:  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%.
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."