Is Bitcoin Really A Hedge Against The US-China Trade War And Devaluing Yuan?
- Dovey Wan of Primitive argues against Bitcoin acting as a safe haven asset for the Chinese
- BMO’s chief investment strategist, Brian Belski also believes, it’s too early to call it so
- Grayscale report argues with data, BTC outperformed twenty other asset classes
The trade war between the world’s two biggest economies continues to intensify while China’s yuan remains above the important physiological level 7 at 7.6 against the US dollar on Friday.
With central banks around the world making rate cuts and a threat of currency crisis looming, Bitcoin is fast becoming a safe haven asset.
According to Dovey Wan, Founding Partner at Primitive, this isn't the case as Tether and Bitcoin are actually trading at a discount in China.
Tether is now trading at a pretty wide negative premium in China mainland, same with Bitcoin
tell me more abt “Bitcoin is a safe heaven asset for the Chinese theory”
— Dovey 以德服人 Wan 🗝 🦖 (@DoveyWan) August 9, 2019
“Pretty sure is not the forex issue as USD itself is pretty strong in underground money market,” Wan said.
Recently, BMO’s chief investment strategist, Brian Belski, went on record with CNN Business saying, it’s too early to call BTC a safe haven.
“Bitcoin has been excessively volatile, especially the last couple of years. It’s the sexy kind of thing to go to now. I don’t base my investments on sex appeal. I base my investment on longer-term perspective. And I think the longer-term perspective, in terms of Bitcoin being that safe haven, I think it’s way too soon to call that.”
Bitcoin Is An “Exciting” Investment Opportunity That “Deserves” A Position in Portfolios
As a supporting argument, it illustrates, since Trump first announced tariff hike in May, Bitcoin has generated a cumulative return of 104.8% versus an average of 0.5% for the twenty other asset classes, currencies, and markets.
The report also notes that the two largest single-country economies in the world represent about 40% of the annual economic output, and the recent prolonged and escalated nature of the conflict could pose “significant contagion risks to the global economy and financial markets.”
Moreover, disruption to the core driver for aggregate demand could significantly hamper global growth producing a domino effect of negative consequences.
What makes Bitcoin an “exciting” investment opportunity, the report says its distinct set of properties, unlike, “any other asset.”
This is why,
“Bitcoin has the potential to perform well over the course of normal economic cycles as well as liquidity crises, especially those involving currency devaluations.”
It further mentions, how Bitcoin represents a “transparent, immutable, and global form of liquidity,” that has the ability to provide wealth preservation as well as growth opportunities.
Grayscale believes, Bitcoin “deserves a steady strategic position within many long-term investment portfolios.”