Tensions are rising again between the two most powerful countries in the world, and that could give Bitcoin a much-needed boost.
China is once again trying to claim authority over Hong Kong, prompting yet another wave of citizen protests. Chinese President Xi Jinping has even declared that his country will do what it wants with Hong Kong, without considering the consequences.
This seems to signal that the reduction of tensions between the US and China will cease to occur, starting to grow again, potentially with implications for the recently approved trade agreement and the economy as a whole.
Bitcoin’s newly discovered status as a safe haven asset – if maintained – may mean that this turmoil will give the main cryptocurrency a boost, as citizens of both countries can turn to it while fleeing fiat currencies that will be affected by political tensions.
Hong Kong reignites tensions between the United States and China
During the early part of Trump’s presidency, his long-negotiated trade agreement with China slightly moderated the growth seen by U.S. markets. Once an agreement was reached, however, the actions began to mobilize a lot, in a movement that was only interrupted by the Coronavirus pandemic.
It now appears that the economic weakness stemming from a practically frozen global economy may be perpetuated by renewed tensions with China – as Xi Jinping now notes that his government will do whatever it wants with China, without worrying about possible consequences.
As mentioned earlier, Bitcoin’s status as a safe haven asset can be boosted by these renewed tensions.
Although the cryptocurrency has closely monitored the stock market throughout the beginning of the year, it has broken that correlation as individuals around the world begin to use it to escape inflation caused by widespread monetary impression.
Furthermore, since economic tensions – such as those seen between the U.S. and China – can have dire implications for the fiat currencies involved, individuals can move to gain exposure to Bitcoin in an attempt to escape any volatility.