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- Bitcoin could surge as U.S.-China tensions rise, similar to the 2015 rebound after yuan devaluation.
- Matrixport sees a potential Bitcoin breakout, with the USD/CNY exchange rate approaching critical levels.
- Despite short-term concerns, Matrixport expects Bitcoin’s long-term growth, drawing parallels to past recoveries.
Bitcoin seems to be poised for a big move up as the tensions between the US and China continue to rise. A geopolitically unstable situation has been traditionally beneficial for cryptocurrencies, and experts expect that Bitcoin may repeat the 2015 trend. In that year, bitcoin recovered sharply from the market slump following the devaluation of the Chinese yuan.
The blockchain firm Matrixport, based in Singapore, stated that the current environment reminded them of events from a decade ago. The latest analytical review mentioned that the exchange rate of USD/CNY is close to the critical levels. This may result in a Bitcoin surge because the yuan is gradually coming under pressure because of the trade war.
Nevertheless, Matrixport remains optimistic about Bitcoin’s long-term prospects, despite concerns over a potential rise in U.S. Treasury yields in the short term. The firm recalled that in 2015, although Bitcoin initially experienced a decline, it made a remarkable recovery by year-end. Analysts predict a similar outcome, with Bitcoin expected to show continued growth throughout the year.
Bitcoin Amid U.S.-China Conflict
The root of the rising tension is that President Donald Trump plans to impose a 50% tariff on Chinese goods. China is seeking peaceful negotiation, but as a result, it stated it will fight to the end, and both are holding their respective positions. The amount of tariffs that the U.S has placed on Chinese goods is already at 34% thus increasing the trade tensions between the two countries.
China has expressed its concern over the U.S. actions, which it described as blackmailing. The Chinese government has stated that any further imposition of tariffs is likely to exacerbate this trend, prolonging the situation between both countries. Nevertheless, as the rest of the global economy prepares for more uncertainty, the effects of this trade war are yet to be seen.
Hedge Against Market Volatility
Indeed, in geo-political and economic risk events, BTC has produced good performances in the past. Most of the retail investors and institutional buyers use cryptocurrencies to hedge against inflation and to hedge against market fluctuations. With the growing tensions between the United States and China, people will look for better and safer investments, and, in this regard, Bitcoin seems to be an option that may prove effective.
According to Matrixport analysts, the current Bitcoin price may be artificially low. But they still consider the cryptocurrency to have lots of potential for growth. Despite these facts, with the yuan falling and geopolitical risks rising, it is also high time for Bitcoin to go up sharply.
For Bitcoin, the ongoing trade war between the US and China is a favorable condition. Investors will turn their attention to cryptocurrencies, which is expected because of instability in the market. Thus, the ability of Bitcoin to leverage this global volatility shall depend on the duration of the trade tensions.
