The global economy is experiencing tough times - and that is good for the cryptomarket.
The biggest world trade war has officially been started by no other than Donald Trump. As expected, China became one of the main opponents of the U.S.
On July 6 at 00:01local U.S. time, a new import duty was imposed for 818 goods from China totaling around $34 billion. As a response to this, on the same day, China imposed a 25% duty on the import of U.S. goods, also totaling $34 billion.
Trump has already threatened to impose additional tariffs for an additional $200 billion if China were to respond (and they did) to the initial U.S. tariffs.
However, the U.S. is not only waging a trade war with China. Trump has also been threatening the EU (which is also ready with its own comeback) with the increase of tariffs. In addition to all that, the United States has raised tariffs for the import of steel and aluminum products from India. To which India responded with similar measures.
Russia wasn't left out. Today, in response to the U.S. protectionist actions, Prime Minister Dmitry Medvedev signed a decree introducing 25-40% additional duties on the import of American products.
In other words, the world economy is experiencing difficult times. But this situation is an excellent ground for the prosperity of the cryptomarket.
A similar circumstance was already observed in 2016, then bitcoin significantly increased during Brexit. And before that, Chinese traders switched to cryptocurrency when their national currency, the yuan, fell. And although the Chinese authorities have banned crypto-trade, it is still occurring, though not on stock exchanges, it can be seen on Over-The-Counter (OTC) platforms.
Since the US is unlikely to abruptly stop its trade war, analysts predict a fall in the value of national currencies, including the dollar. This means that the investors will be forced to look for alternative ways of preserving their capital. Traditionally, precious metals, such as gold and silver, were considered as a safe haven. But they are gradually giving way to cryptocurrencies. And not without reason.
Cryptocurrencies, especially bitcoin (Bitcoin) , have long been called digital gold. There are several reasons for this. First, the total gold reserve is still unknown. But the maximum issue of BTC is known and is 21 million coins. Storing and moving bitcoin is also easier when compared with gold. This means they are both faster and, importantly, cheaper. Only last week an unknown bitcoin-giant transferred 48.5 thousand BTC ($290 million) with a commission of only $ 0.04.
There is only one drawback to cryptocurrencies, volatility. But experienced investors have learned to diversify assets and, thus, minimize losses.
Alexey Kirienko from Exante commented this news, saying that 'A trade war between the U.S. and China could lead to China refusing the U.S. dollar, which in its turn would damage the dollar's position as a global currency. This is very positive news for cryptocurrencies '
So analysts predict a good forecast and they are confident that in the near future bitcoin, like other cryptocurrencies, is expected to grow due to the economic instability caused by the U.S. and their trade war.