BITCOIN Surges While US Stocks Tumble On Trump’s Tweet!

Bitcoin (+7.9%) and US 10Y Treasuries (+1.3%) SURGE while US stocks (-2.0%) 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 2.03% 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 +7.86% on the news. The chart shows that traders are increasingly using  Bitcoin to hedge against macroeconomic and geopolitical risks. 

Now is a perfect time to buy Bitcoin. 

What effect will tariffs have on the US economy? 
Tariffs are taxes that a government levies on imported goods.  
Tariffs will reduce the demand for Chinese goods in the US by increasing their prices above the free trade price. 
The economic  impact is going to be harmful to both countries. However, the economic  impact for China is going to be worse, as compared to the US.  
When the 10% tariff is imposed, the Chinese businesses are more likely to decrease prices for their goods to retain their market shares. This reduction in prices for some products will effectively lead to a redistribution of income from China to the US. The prices for the end consumers in the US might not change, while the profit margins of Chinese business will decline, and the revenue from tariffs to the US government will rise. 

Is  Bitcoin a true safe-haven asset? 
Looking at this chart gives me an increased conviction that  Bitcoin is perceived by traders as an increasingly safe-haven asset to hedge against macroeconomic and geopolitical risks. 
It is different from other safe-haven assets like the  US Dollar ,  Gold , and the U.S. Treasury notes.  
Investors perceive  Bitcoin as a true hedge of Black Swan events, particularly events which lead to the broad market declines. This becomes reasonable if we think about the design philosophy of Bitcoin created to function without any centralized institutions or trust.  
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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Disclaimer  
This report is for information purposes only and should not be considered a solicitation to buy or sell any cryptocurrency or cryptocurrency product. Monfex accepts no responsibility for any consequences resulting from the use of this material. Any person acting on this trade idea does so entirely at their own risk.