Rising US-China Tension May Impact Crypto Market Again
Tension between the U.S. and China is rising again and there is an indication that it could lead to a full-blown financial tussle which could invariably have an impact on the cryptocurrency market.
It’s likely the U.S. Treasury Department could impose controls on transactions and freeze assets of Chinese officials and businesses for implementing a new national security law that would curtail the rights and freedoms of Hong Kong citizens, according to Bloomberg.
Added to that is the main message from a recent interview of a U.S. Representative with MarketWatch which seems to be hinting at the table being about to set to get China to budge on key terms with regards to Chinese companies’ involvement in the U.S. market as would be stipulated in a newly-introduced Holding Foreign Companies Accountable Act.
Rep. Brad Sherman notes that the new act is not to get Chinese companies delisted from the U.S. market but rather to force them to adhere to existing standards in the capital market.
“The purpose here is not to delist or de-register; it’s to demand that China do what every other country has done and agree that if their companies want to participate in U.S. capital markets, they agree to live by U.S. capital-markets rules,” Sherman argued. “It’s time for China to blink first for the benefit of investors.”
Day after Goldman Sachs says don't buy bitcoin, bitcoin is up +$500. 🤔
— Tyler Winklevoss (@tylerwinklevoss) May 28, 2020
As the largest economy in the world with more international trades transacted with the U.S. dollar, a delisting of Chinese companies from the U.S. markets will have a severe impact on China’s economy and its citizens may be forced to seek alternative investments like cryptocurrencies to hedge their portfolios.
Though Sherman had in 2019 called on colleagues to outlaw cryptocurrencies saying they threaten to disempower American foreign policy and diminish the rule of law, passing the new act into law will add more pressure to the existing tension between the two largest economies including causing a drawback on the recently-passed trade deal. Regardless of whether investors in China and other countries continue to add the U.S. dollar exposure to their portfolios which will sustain its strength as a global reserve currency, a felt impact on the U.S. dollar – like inflation as a result of immense money printing by the U.S. Federal Reserve – could lead some investors to other options like gold and cryptocurrencies such as suggested by author and entrepreneur, Robert Kiyosaki.
Bitcoin stands to benefit more in the event an alternative hedge is sought in the cryptocurrency space going by key recent developments. Glassnode, which provides advanced charts/data/insights for investors in Bitcoin and digital assets indicates that 60% of Bitcoin supply currently has not moved in over a year. It says this shows an increased investor holding behavior which was last seen at these levels right before the top cryptocurrency’s bull market in 2017 which pushed its price to almost $20,000.
Also to Bitcoin’s advantage, the cryptocurrency venture run by the Winklevoss brothers has partnered with Samsung Electronics to allow its users to more easily trade and store digital assets on mobile phones. Gemini is now the first crypto exchange that allows users in the U.S. and Canada to access Samsung’s blockchain wallet to view balances in their wallet app which bypasses the user’s need to go through another log-in to start buying and selling. As at Q4 2019, Samsung’s phones held 18% of the global smartphone market, on par with Apple, according to Counterpoint Research.