The world awaits yet another ruling on an Exchange Traded Fund (ETF) decision which may come earliest by Aug 10 if the Securities and Exchange Commission (SEC) follows the 45-day option. If they use the full 90 days consideration option since the June 26 notice of CBOE filing was made public, the decision could be longer. Between now and then, and if the ETF gets approved or not, the price of Bitcoin will likely increase either way. While waiting on the outcome, it is worth looking into the ongoing trade war between the US and China and consider some of the ways its effect could reflect on Bitcoin and other cryptocurrencies.

SEC has been collecting comments for its evaluation of the proposal. Most of them look good. An approval for the first one could lead to another and then to another thus opening the door to more investors. This will add to the established view that Bitcoin’s price has been on a downward trend for the last few months while the mining hash rate has been climbing. Both instances could reflect well on Bitcoin’s price if given a long-term outlook. But what about the trade war?

The war has started even though its effect won’t bite hard until the next two months. However, China’s yuan fell to a near 11-month low on Wednesday July 11 – at ￥6.67/$1 falling about 0.6% – after the US announced a new round of tariffs on $200 billion in goods.

The managing director of foreign exchange strategy at BK Asset Management, Boris Schlossberg, thinks China will continue to lower the yuan to rebalance the cost relationship as the US pushes harder on tariffs. This could trigger capital flight from China.

China is largely cut off from Bitcoin right now consdiering the recent report that about 1% of Bitcoin trading in China is now done using the yuan. If the yuan is devalued and the dollar does not fall, the trade war may cause the 1% yuan/BTC to be reversed a little. Trade disruptions may lead some people who want to get money out of China to use Bitcoin for the purpose. After all, despite the report, it may be that some people in China still trade Bitcoin with yuan through VPNs whose firewalls have not been detected. Others may be doing crypto pair tradings for the same purpose instead of using the yuan directly.

Though a senior fellow at Yale University and former Morgan Stanley Asia chair, Stephen Roach, thinks the US is on track to lose the war, China’s slowing economy, a falling stock market and a weakening currency could give many a cause to worry especially if it will create more inflation.

If the trade war persists, it will be the most appropriate situation to confirm if any worrying crypto-related news from China will move the industry as a whole like it used to be in time past. The crypto space has been calm for some time. China’s influence on the crypto market seems to have lessened. Any uncertainty in the financial situation of the Asian giant will show whether the Bitcoin trading volume once recorded in China was indeed a representation of real demand.

In the end of it all, the ones to suffer most with a sharp fall in an unsettling economic environment will be the altcoins especially those with no meaningful use case(s).