Impact of China and US Trade War on Bitcoin!



what is the trade war between China and the United States how is that going to affect cryptocurrencies will it allow cryptocurrencies to rise is this going to be something I have to be worried about you guys have heard it in the news it's been all over the place the impact of this upcoming trade war that we have with China specifically launching with tariffs which are pretty much taxation on both sides of the country and so what I wanted to do today is spend some time talking about how this trade war is going to affect crypto as a whole everything is interconnected in the financial world if cryptocurrency if goes down possibly asset prices like stocks go up real estate goes up stocks go up and down there are correlation between although and they're more connected than you may think so stick around and I will explain everything from A to Z all right so Bitcoin has historically been classified as gold 2.0 originally when it first started by Satoshi Nakamoto back in 2009 Bitcoin was classified as the alternative currency for the US dollar or for any currency that would most likely limit purchasing power from one country to another in layman terms what this really means is that Bitcoin was meant to be something that is going to replace fiat now you have to remember the context of this right 2009 we're coming off the financial crisis how housing markets just went down the toilet stock markets across the board have just gone to zero we have the European mess along with bank defaults etc etc now we're kind of playing out a second there a geopolitical event which has to do with what I call the possible coming currency wars or also aka trade wars which technically speaking they're two different things but they're actually entry into the cause of the trade war really is caused by the fact that the Western countries have a cue chyna of manipulation in the trade surplus and deficit fight so for example of a country decides to sell more Goods than another one then there's what I call a trade deficit or vice versa a trade surplus if there's more so China technically has a trade surplus versus the US and whatnot then you kind of go back and forth in terms of the definitions on that now behind the scenes there's also currency manipulation where one country decides to devalue a currency and another one has a higher value current team making the goods that they sell more expensive than the other country now how does this actually affect cryptocurrencies as a whole well crypto currencies are currencies which means that they allow transfer of wealth from one country to another that's what makes Bitcoin so appealing to many countries outside of the United States because in a country like Venezuela where you have the currencies going down Bitcoin provides you with an opportunity to protect against soaring inflation rates now I want to focus specifically on why this is important if you take a look at bitcoins price action that happened during the last bear market that we had in 2014 and 2015 you might want to ask yourself what actually caused that bear market and what was the reasons why we got out of that bear market to begin with leading up to the 2017 bull run and one of the things I saw here was that back in 2014 for those of you who were around you do remember that mount GOx played a critical role in the fall of Bitcoin price as it got hacked many people lost her money which eventually got dumped on the major exchanges so far we haven't had any of that we've had smaller hacks here and there but nothing on the scale of mount Cox in fact we've been getting more exchanges popping up with better security I mean by Nance recently had had issued a couple of you know questionable pieces about them getting hacked but overall it was into that level now what happened after that was in order for us to get back to the 2017 historical price what had happened was the actual in 2004 over to November of 2016 Bitcoin actually rose from 600 to about 780 dollars now that was coming off the low back in March of 2015 from two hundred three hundred dollars and what had happened was the Chinese renminbi had depreciated against the US dollar in the end rose and make one rose to the upper $700 now the question is why the connection between the Chinese renminbi x' and Bitcoin well what you probably don't know maybe some of you guys do know is that Bitcoin bitcoins mining poles is heavily in the Chinese side about 81 percent of the hash rate aka the mining operation is located in China which means that they're the ones who basically have Bitcoin right off the mighty mills and the rest of the world splits that up evenly so China has a very very heavily concentrated mining operation and those mining operations are concentrated within about four or five main miners and what happens here is that if you actually think about it China also has capital controls on the influx of capital coming in and coming out cryptocurrency has allowed these countries like China to basically transfer massive amounts of wealth west to the west by passing capital controls now we've already seen that last year with the Chinese Fudd back in September when they were shutting down exchanges and they were closing that icos and so what happened afterwards was the depreciation of the renminbi actually creates a situation where capital outflows begin to increase in other words as the currency begins to depreciate people don't want to keep their money in room and be anymore so what they want to do is get the money out of the country and so after back then after an October November 16 by January of 17 Bitcoin rose to about 1115 that's where we had that really massive spike most people got in around Bitcoin for especially with the theorem around that time and then it just began to start flying after that going up to 2,000 3,000 4,000 5,000 6,000 by October of 2017 Bitcoin had rose a tall I'm high and this came off after the Chinese FUD the icos and also the forks and then finally topping out back in January so as you can kind of see from here this is actually very interesting a lot of the rallies that we saw prior to 2017 were around this idea of China and its inflation rates the uncertainty of the government's mount GOx blah blah now let's go back to what's happening right now right now what's happening is we have a trade war that is occurring between the United States and China and what this is basically coming down to is an escalation of tariffs so the US and Washington has put about thirty four billion dollars worth of tariffs on Chinese goods on Friday of last week and some of the goods that have been hit by the Chinese tariffs are going to be by the US goods are going to be frozen beef pork fruits and vegetables dairy products tobacco pet foods beverages and so on and on the US on the Chinese side they're gonna get hit with tariffs by buy US tariffs on vehicles spacecraft and technology and industrial machinery medical devices and other parts of semiconductors and whatnot now this is where it gets really interesting is because though both sides were basically going to for tat in terms of these tariffs obviously there are going to be some losers and there will be some winners at the end of the game but the most important part is we're kind of three focusing back on China again now let's take a look at the second part the stock market for the China for China's China stock market has been the worst performer worldwide the Shanghai index has basically come down almost like 20 30 23 percent since January of this year and coincidentally back in 2016 15 Chinese stock markets were also low so again the confidence in the Chinese is actually coming down a little bit because of the fact that this trade war may in fact hurt them more than the US side now here's what's interesting about this is that if you think about it for a second if you're a foreign investor you are a an American investor and you're investing in Chinese stocks Chinese currencies and you see this uncertainty with the trade war there could be a potential for fight for capital and the closest thing that money can move into in addition to the capital controls could be Bitcoin now also when I mention is that the same time as last time in 2014 2015 16 we had what I call the yuan sliding now China has publicly stated that they're not going to depreciate that you want because they know what's gonna happen when they do that however I would do want to mention that the markets have already reacted negatively to the trade wars by sending the yuan into a free fall now the Chinese government very different from the US government in which the currencies are actually manipulated and controlled by central governments in the u.s. the free free-floating currency which means they just adjust the interest rates but they don't really go ahead and dive into currency manipulations and so what happens here is that if the yuan decides to slide even more in the future based on these trade tensions if the government decides to ratchet up the trade charreteras and if China can't find those then we're they're gonna find a situation where Bitcoin may get additional influx coming in as a flight to safety now currently most people governments usually run into bonds for safety u.s. bonds usually Treasuries kind of go in there and there could be a potential run again now in a nutshell what does this all have to do with crypto we've seen this market especially 2017 where I CEOs are coming out from China in fact many of the coins that people shill all over the social media have been have been icos coming out from the Asian countries in fact if you take a look at your top ten top 20 coins majority of more actually coming up are the new ones are coming up or Asia now is it a coincidence that these coins are coming out from the Asian countries versus two Western countries and I do think that the is something at play here that has to do with the correlations between the drop in asset prices in Shanghai the tariffs that are coming in that obviously are putting pressure on both the markets and the currency and also the fact that Bitcoin has historically been a flight to safety now also when I mentioned is China can actually counter tariffs by doing a couple of things number one is they could actually devalue their currency to make Goods Chinese goods a lot cheaper which they publicly have said that they will not do who knows if that's going to be the case the second thing they could do is they can align themselves with other countries creating a different trading partner that could eventually bolster their currencies in which case you would still get that situation where flight money would come into the unit to the Chinese economy and the stock market would actually rise so case in point two things that I think could potentially make Bitcoin stronger and as this kind of gets larger is number one is the uncertainty of the Chinese economy the number two is the obviously the regulation on the Chinese side but also the fact that they control a lot of the mining hash rates so if they still control those mining hash rates and they are continuing to provide support for the Bitcoin network and there is a destabilization of the Chinese currency there could be potentially more price appreciation for it miners would probably switch keep their Bitcoin versus selling it in the hopes that they would protect themselves against inflation I remember these miners are generating massive amounts of coin every single day and they have a couple of choices they can either sell the coin on the open market and get yuan or dollars or two they can just sit on the currency on the Bitcoin currency and watch until these two countries decide to go at it or maybe who knows maybe the US could devalue their currency as well and so Bitcoin will be the front-runner so I'm very optimistic in either case it's a good it's a win-win for Bitcoin I just don't see the situation being where Bitcoin losses because Bitcoin has historically been that store of value against currencies against trade wars against currency wars which I'm going to talk about in our next video thank you very much crypto but up

28 thoughts on “Impact of China and US Trade War on Bitcoin!”

  1. Awesome listening to somebody with an understanding of international markets. Exciting times on the horizon eh?

  2. Thanks for your videos..nice..but I also want to use this medium to recommend a trader who I just started working with and has always kept on making me profit

  3. trading wars, housing bubbles, EU debt and migrations problems. It will ignite the bull run again, like it did a few years ago. Same problems, but bigger then last time.

  4. Once again, an insightful analysis of macro economic factors and their possible effects on crypto prices – you are one of the few intelligent crypto you tubers – many thanks crypto bud!

  5. What you think about the "New Silk Road" and the connection to all this? China is investing huge huge capital to this infrastructure to Europe.

  6. the trade wars are compounding. china sells to USA, which then sells to china, which then sells to europe, etc, etc,

  7. Great work your research is excellent and appreciated seems like bitcoin will be a flight to safety and this triggers the global reset pushing bitcoin 100k

  8. Your channel is becoming one of my top favorite next to Modern Investor. And that says a lot in my book. Keep up the content.

  9. The non crypto content is appreciated. It helps to paint a better overall picture for all investors. Keep it up.

  10. I'm bored to death due to lack of crypto content on youtube, so thanks for the fact you're still making videos for us all! At least now I've got something to watch!

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