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Bitcoin Surges 8% As Trump Escalates Trade War

August 2, 2019
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“The key to making money in stocks is to not get scared out of them”
― Peter Lynch

5-Day Change

  • Bitcoin: $10,551.81
    +11.73%
  • Ethereum: $220.00
    +6.41%
  • S&P 500: $2,917.60
    -3.27%
  • Dow Jones: $26,286.10
    -3.23%

Trading Ideas

 

Bitcoin (+8.04%) and US 10Y Treasuries (+1.3%) SURGE while US stocks (-3.0%) TUMBLE on President Trump’s abrupt escalation of a trade war.

President Donald Trump abruptly escalated his trade war with China. 

According to Trump’s tweet, a 10% tariff will be imposed on $300 billion in Chinese goods on Sept 1, and the tariffs can be raised beyond 25%.

The 25% tariff already imposed on $250B in Chinese goods will remain in place.

How did the financial markets react?

Trump’s escalation of a trade war wasn’t on anyone’s radar and hit the markets by surprise. Now we see a complete re-pricing of expectations surrounding the trade war.

It's outright negative for stocks. Investors flee into safe-haven assets, which could be seen by market price changes following the news announcement:

  • The S&P 500 declined by 2.98% due to investors selling US equities to buy 10-year Treasuries and gold futures.

  • The prices of the US 10-year Treasury notes surged by 1.31% to 128.8 - the highest price (the lowest yield) since 2016.

  • Gold futures on CME spiked by 2.32% to $1,436.0 - the highest price since 2013.

  • Bitcoin IS SURGING +8.04% on the news. The chart shows that traders are increasingly using Bitcoin to hedge against macroeconomic and geopolitical risks.

Why is Bitcoin price rising?

Looking at this chart gives an increased conviction that Bitcoin is now being perceived by more traders as a safe-haven asset to hedge against macroeconomic and geopolitical risks.

When investors foresee a risk of a failure of major financial institutions or political institutions and policymakers, Bitcoin surges in price.

What’s the upside potential for Bitcoin?

We expect the equity markets to continue declining, which will be a strong catalyst for Bitcoin price appreciation over the near-term. Bitcoin has broken its short-term significant resistance at $10,000 and the trend is gaining momentum upwards. 

Technically, based on Bitcoin trend analysis and the analysis of chart patterns, Bitcoin price may reach at least $12,000 over the next week, representing a 15% upside potential.

Now is a perfect time to buy Bitcoin.

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