Bitcoin, the biggest market cap in cryptocurrencies, leaped more than 7 percent on Monday and more than 20 percent in the last seven days, as investors feared the impact of trade war over the global economy.
The Bitcoin, despite being the most widely traded cryptocurrency with billions of dollars in volumes every day, it continues to struggle with unbridled price volatility. However, the price of Bitcoin appears to have risen suddenly last night before China announced an increase in the benchmark yuan price.
Encryption enthusiasts said the moves that bitcoin has achieved are fulfilling its potential as a safe haven asset. As Bitcoin is immune to the impact of geopolitical tensions or government intervention because of its decentralization. Unlike the government's paper money, it also has a total supply cap of 21 million, which should reserve and even boost its future value.
What support this claims that when the Federal Reserve worried about the trade war dispute and decided to cut interest rates by 25 basis points on July 31, the Bitcoin has risen more than 20 percent since then.
What might support this idea that investor’s behavior towards such unpleasant events is to move small portions of their investments in safe haven assets, especially the tense trade war between China and United States.
Trade War Escalates
The trade war escalated last week after U.S. President Donald Trump imposed additional 10 percent tariffs on all Chinese products, while the Chinese side replied by setting a lower yuan fixing below 7 per dollar. A level not seen since the 2008 financial crisis.
Not to mention that, the United States has lifted its travel warning to Hong Kong and urged travelers to exercise greater caution in Chinese territory over what it described as civil unrest after months of violent street protests.
As the protests in the Asian financial center began with opposition to the now-suspended extradition law and evolved into a demand for full democracy.
Besides, it seems likely that the UK could leave the EU without a trade deal in force on 31 October, putting considerable pressure on the pound and sending it below $1.21 for the first time since January 2017.
Meanwhile, there are persisting worries of a global growth slowdown, with the world gross domestic product rate for the current year slashed by 0.3 percent from 2018.
Bitcoin vs Gold and Other Cryptocurrencies
The Bitcoin’s latest rally coincided with the upside move of classic safe havens, most notably gold that hit a new six-year high on Wednesday at $1510 an ounce.
Bitcoin rose on Thursday about 2.11 percent at $11,867, where it has climbed, so far, more than 200 percent since the beginning of the year.
Compared to other cryptocurrencies, the Bitcoin remained the most favorite, as it its dominance jumped to near 70 percent of the total market cap.
With a market capitalization of just over $200 billion, Bitcoin is now the world’s eleventh largest money supply, according to Rhythm Trader. But it is still far behind gold’s capitalization of over $8 trillion.
However, Tezos that currently ranked as the 16th largest cryptocurrencies have made gains of more than 200 percent since January, with a market value of $1.5 billion, where it added in the last week only about 15 percent to its value.
Tezos's latest positive development sits on a number of notable victories for contract-focused and secure smart contracts, which support XTZ's cryptocurrency, following its successful 2017 initial coin offering (ICO).
the prices of other major digital currencies, Ethereum plunged about 0.28
percent at $226, Ripple currency was down by 1.03 percent at $0.31 and Litecoin
lost about 2.24 percent of its value to reach $90, as of 10:35 GMT.