Bitcoin Price Surge: Maybe Not Trade War But Whales
The impact of the superfluous trade war between the US and China may be widening on a scale that is seeing investment diversified into global assets but it may not be responsible for the surge in Bitcoin price, a crypto insider said.
Amidst the rising tension between the two largest economies which has seen global stocks fall for a sixth day by Monday August 5, the head of U.S. operations for CoolBitX, an international blockchain security company specializing in digital asset compliance hardware and software, has a different view of what could be pushing Bitcoin price. Tom Maxon believes it has less to do with macro conditions and more to do with whales taking advantage of the market momentum.
With gold price trading at a 6-year high at the same time and Bitcoin saw a jolt of almost 20% in its price since Friday to reach a month-high of over $12,000 by Tuesday, it would be difficult not to accept that these supposed safe havens are not performing in the role expected.
After admitting that the global market turmoil could have been responsible for the recent Bitcoin surge above $11,000 and how a lot of currency holders could see the top cryptocurrency as a safe haven, he says the activities of whales in the ecosystem are a much bigger issue.
“However, there is a much bigger issue at play in the digital asset marketplace. Billions of dollars in daily volume are handled by whales and managed portfolios through over-the-counter (OTC) desks, and actually relatively smaller volume is held in exchanges that are accessible by retail investors,” he says. “OTC desks are largely unregulated and therefore, it is impossible to know exactly where the inflows and outflows are coming from. These whales and shrewd, large-volume traders (including exchanges themselves) will most likely leverage Bitcoin’s current upward momentum toward a new high from its previous peak in order to short it to the detriment of less powerful retail traders.”
The trade war intensified following recent threats of tariff imposition by US President Donald Trump while China’s currency fall below key 7 per dollar level for the first time in a decade. Though not confirmed as a deliberate move, the devaluation of the yuan is a big shift as it could help China cope with the likely impact of Trump’s next round of tariffs.
Doubts have been mounting that the Chinese apex bank will be able to protect the value of the currency even as the yuan could get weaker as the September 1 tariff deadline draws nearer and threats that Beijing is planning to leave the trade talks altogether could be real.
Wealth chinese sending their cash out of the country … more than 350 million social media comments there over the weekend related to 'capital flight' or getting $$ out of China. Hard to see a positive outcome from this …
— Brian Sullivan (@SullyCNBC) August 5, 2019
A report suggests that this growing fear is causing a bit of Chinese money to flow into cryptos as their prices are surging at the same time as the worrying trade war escalates. The nexus between public reaction – as evident in social media’s trending RMBcrack7 hashtag which has garnered over 350 million views so far – and being a risk factor to trigger capital flight is not hard to build.