Forbes Analyst: “Bitcoin May Be the Winner of the US-China Trade War”
A recently published report has drawn attention. The report was prepared by a thinktank organization that is in contact with China’s intelligence agency and raises the possibility of conflict with the United States.
The report finds that anti-Chinese thinking has reached the highest levels since the Tiananmen Square Massacre. As will be remembered, after this massacre, great powers imposed sanctions on China, and the Chinese state was in a sense isolated from the surface of the world. Since then, China has been on the surface of the world again and is now the second largest economy in the world.
A source aware of the report compares this report to the Novikov telegram. Novikov was the US ambassador to the Soviets immediately after the war. In 1946, he sent a message to the Soviet Foreign Minister Molotov to warn America’s foreign policy, heading the decades-long Cold War between the Soviet Union and the United States.
When we look now, there is an economic separation and potential signs of cold war all over the world.
China endorses its censorship criticism on handling the COVID-19 outbreak. The government protects Terminus2049, an independent online publication that hosts censored news articles about the COVID-19 outbreak, reportedly. Local officials are now using the police to threaten relatives of COVID-19 outbreak victims who want to sue the government in Wuhan .
Meanwhile, as countries and organizations such as Sweden, the USA, the European Commission and Australia seriously criticize China, tensions are getting more and more as they demand an independent investigation into the origins of the pandemic.
Bitcoin in Conflict Environment
In this case, we face a question like this. How do Bitcoin and other cryptocurrencies stand in the deteriorating US-China trade war?
This problem has some major disadvantages. Faced with a greater break in economic ties, China can exert tighter capital controls over its population. With this in mind, China can implement bilateral efforts on its central bank digital currency, trying to ban its citizens with a wider cryptocurrency ecosystem.
Given the interest of institutional investors, Bitcoin may also be subject to short-term price drops.
Nevertheless, there are various indications that Bitcoin and cryptocurrencies can actually make significant rises in the US-China cold war.
The first is that the fiat and capital gates between the largest and second largest economies are significantly interrupted. In Hong Kong, there may be a process of abandonment of the “Economic Storm” and the “One Country, Two Systems” framework that helped Hong Kong build a reliable capital bridge between China and the rest of the world.
The Chinese economy still has a large export-based component. The export item is extremely important for China. These businesses and exporters are not able to withstand sudden exports. Cross-border capital flows will be needed as existing capital bridges will collapse. Here is an area where cryptocurrencies can play a role. After all, cryptocurrencies are trading premiums on Asian exchanges and have an inverse correlation with the Chinese Yuan.
Secondly, as both China and the US begin to move towards economic spheres of influence, China will likely have Southeast Asia, Africa Mongolia, Russia, Indonesia, Thailand, Malaysia, Vietnam, Singapore, Philippines, Myanmar, Cambodia, Laos, Brunei, East Timor and the United States. is trying to regulate relations with its North American, South American and European counterparts. In this case, they will suffer from less economic problems because they will not benefit from comparative advantage and free trade.
This will probably be a deliberate choice when it comes to certain industries. For example, you may want to keep medical supplies and production within the limits of your nearest political domain.
However, the overall impact of such an approach would be a possible global drop in growth rate as economies coming to a halt due to COVID-19 go out the door.
If economic growth does not start, what it means in the short and medium term and perhaps for a longer period of time is the loose monetary policy that should have inflationary effects and encourage growth as the monetary base begins to be tried. This will help support investment assets, such as cryptocurrencies, for institutional investors, and will help resolve a firm contrast between the deflationary economy of cryptocurrencies and the inflationary policies of monetary authorities. Billionaire investor Paul Tudor Jones said that while turning to Bitcoin with this argument, the cryptocurrency reminded the role played by gold as a safe haven in the 1970s.
Finally, as more and more jobs and services are forced to go online due to multiple crashes, the potential for digital exchange tools will be enormous to power larger parts of the economy. Along with the tension between China and the US, a global standard for digital currency from a central bank will succumb to competition between two different standard carriers, which have quickly become violent geopolitical rivals. This can help speed up cryptocurrencies as consumers truly look at a global cross-border payment system.
The potential deterioration of the US-China trade war and the subsequent cold war will have many unpredictable consequences. However, it is worth remembering that there are surprising and strong reverse factors as well as some downside risks for cryptocurrencies and Bitcoin.