Last week I blogged about whether Bitcoin and other cryptocurrencies will experience a boom thanks to rising economic instability around the globe triggered in part by the continued trade war between Washington and Beijing. Said war is hurtling forth with no signs of abating; in fact it seems to be picking up steam, regardless of Trump’s decision to suspend additional tariffs, which he did to avoid being branded the President Who Stole Christmas.
In addition to roiling global markets, the Trump’s trade war has many people worrying that a recession in the offing. Predictably, investors are looking for alternatives. Bitcoin is one such alternative due to its independence of geopolitics and the resulting economic consequences. “Because it’s decentralized and not dictated by a single government, it’s not subject to the whims of a central bank or political leader,” Markets Insider reports.
Increasingly, Bitcoin is seeming to investors like a sort of lifeboat in a sea of economic turbulence. Evan Kuo, CEO of Ampleforth, a digital asset protocol, told Markets Insider explained to Market Insider:
“In a slowdown, since the global economy is so interconnected, there are only a limited number of assets that are isolated.”
And at the moment, Bitcoin is as isolated as it gets. Hence, more investors are taking a serious look at it, as well as other cryptocurrencies. The drawback, of course, is crypto’s inherent caprice—as we’ve seen, such currencies are susceptible to wild and unpredictable fluctuations in value. Bitcoin is currently trading at just over $10,500. That could change drastically at any time.
But Kuo says investors shouldn’t let such volatility scare them off.
“It’s helpful that it’s volatile in a way that’s not connected to other assets,” he said. “There’s been almost 10 years of data to suggest that the coin has almost no risk exposure to precious metals, commodities, equities, currencies, and so on.”
With greater risk comes the potential for greater reward, and many investors are increasingly willing to take that risk with regard to Bitcoin. Time will tell whether it pays off.