Bitcoin demand is set to be ignited as leaders from across the globe gang against China. Led by the U.S., global leaders are not happy with the way Beijing responded and handled the COVID-19 pandemic outbreak. Although there has been some tension between Beijing and Washington, the situation is set to escalate.
The current situation pitting the U.S. and its allies with China might spark a trade war that will be good for the biggest digital coin by market capitalization. This has prompted David Sokulsky, a renowned investor to warn that the situation might become worse. A repeat of last years’ trade war between Beijing and Washington could resurface.
Trade war could lead to a Bitcoin demand boom
Should the war escalate, a Bitcoin demand is imminent with many investors using it as the hedging option. Bitcoin usability is being witnessed with the coronavirus response. A U.S. China trade war could impact the global economy and Bitcoin is the bridge between the fiat and digital economies.
The moment all countries close ranks behind the U.S. to fight Beijing – due resentment from the COVID-19 pandemic – things will start working out for crypto with Bitcoin being the sole beneficiary.
Donald Trump, the U.S. president has been pushing for Xi Jinping administration to be investigated in relation to the COVID-19 origin. As the situation stands now, Sokulsky says it might trigger a bigger trade war than what was witnessed last year.
That’s a major risk which isn’t being priced in at the moment. As we pass peak infection rates, the politicians are going to want to blame somebody, and the obvious target for that blame is China.
Trade war role on Bitcoin demand boom
The situation is expected to slow down economic growth not only in the U.S. and China but across the globe. Last year’s trade war saw prices of oil and other consumables skyrocket every time Trump tweeted. This took a toll on the Chinese Yuan that hit a low of $7, leading to risks on the asset and stock disposals.
If the events of last repeat themselves, the Chinese have to look elsewhere to cushion a devalued Yuan. When this happened last year, Bitcoin grew by 35 percent and a repeat of the same could lead to a Bitcoin demand boom.
China and U.S. trade tariffs last could come haunting the two economies. What’s more, the coronavirus pandemic continues to stretch the economies further as central banks continue to print more money to remedy the situation. However, most investors are turning to Bitcoin for protection against the anticipated inflation making the digital asset the best hedge.