The US is set to impose additional tariffs against multiple countries in the coming days. The latest one is set to go live today which will impose additional tariffs of $34 Billion for products imported from China. China has also threatened to retaliate by adding tariffs of $34 Billion on American imports. To this, Trump has vowed to add $200 Billion tariffs if it happens.
US’s trade war is not just with China. Trump has also threatened the EU with more Tariffs. If that goes through, the EU is already ready with a new set of duties for American products worth approximately 18 Billion Euros.
The US has already imposed additional taxes on Indian products. India has now responded with $231 Million tariff hike on 30 US products.
The global economy is at a low, with multiple currencies at their lowest point. Indian Rupee, for the first time in 5 years fell down below Rs. 69 last week. Chinese Yuan has also taken a substantial hit. Yuan has fallen down by 10% since April 2018 after Trump announced the tariffs. Shanghai Stocks have also gone down by 25% in 2018 alone.
Cryptocurrencies thrive when countries battle uncertain economic policies. Bitcoin saw a significant uptick when Brexit happened last year. Similarly, Chinese traders flocked to cryptocurrencies when the Yuan was devalued a few years ago. However, this time around the Chinese government has banned the trade of cryptocurrencies. But the trade still continues, in a peer-to-peer, OTC manner instead of exchanges.
As The US goes on a trade war with multiple countries, the value of national currencies are expected to come down, including the US dollars. Investors are going to look for alternate ways to store their wealth. Traditionally, precious metals like gold and silver have been used. But acquiring gold is not easy. Once acquired, it is even harder and expensive to securely store them.
Cryptocurrencies, especially Bitcoin is often referred to as digital gold. It is scarce. The total supply of Gold is unknown. But the total supply of Bitcoin is fixed at 21 Million. Securing Bitcoins is also as easy as securing a tiny hardware wallet. It takes a good while to move Gold from one country to another. Bitcoin, on the other hand can be sent instantly for a tiny fee. Just last week, $500 Million worth Bitcoin was transferred for just $2!
Cryptocurrencies are extremely volatile. So we may not see investors go full on cryptocurrencies yet. However, smart investors with an appetite to diversify have been actively investing in Bitcoin and other cryptocurrencies. It is set to increase as economic instability impacts multiple countries from the trade war that the US has just started.