The asset management firm situated in New York published a report on Thursday where it requested fund managers to include Bitcoin to their portfolio as weighing tool against the escalating US-China trade conflicts. Terming the cryptocurrency as “an exciting financial technology and investment opportunity,” Grayscale revealed that it has the capacity to act as a hedge against the delaying economic tension.
The report said:
“With continued adoption, Bitcoin represents a transparent, immutable, and global form of liquidity that can provide both wealth preservation and growth opportunities. As a result, we believe it deserves a steady strategic position within many long-term investment portfolios.”
Barely a week after Donald Trump, the US President issued a warning to strike an additional 10% tariffs on Chinese imports estimated to $300 billion, the Grayscale study emerged. To intensify the war, the US went ahead on Monday to brand China as a currency wheeler-dealer after China weakened the strength of its national currency, the Chinese yuan. This was far beyond $7 as a revenge against tariffs threat by Donald Trump.
The tit for tat tactic did not support the international market school of thought. On Wall Street, following Trump’s tweet, the stock experienced their horrible day of the year. This disturbing market fallout was triggered by an overnight sell-off in Asian and European markets. Haven assets such as Bitcoin and gold were the only hopes, each increasing impressively despite the distinct weaker market opinion.
Grayscale clearly indicated that the international market’s poor performance is far from over any time soon. China and the US together represent about 40% of the world’s global economic output, with management over $35 trillion value of Gross Domestic Products (GDP). With the duo superpowers still in a state of limbo and President’s Trump recklessness in pushing through the deal of his preference out of a strict headed China, the worldwide equity market is weighing on the prospects of experiencing another recession, and perhaps even worst.
“Certainly, escalating trade tensions through higher tariffs and restricted access to markets is hurting sentiment, increasing costs, damaging supply chains and weakening corporate profitability,” Reuters cited James Knightley, the chief international economist at ING. “This then feeds through into consumer sentiment and spending more broadly in the economy with recession risks mounting.”
Grayscale is fully convinced that Bitcoin could offer a smoother landing ground for investors attempting to secure themselves from the China-US trade conflict.
The upside swings of the cryptocurrency following anti-China tweets by president Trump portrays its potential responsibility as a hedging tool. And while the critics doubt how Bitcoin can be a store of value as a result of its natural price fluctuation, its progress indicates investors don’t bother concerning the classic financial definitions anymore. They’re only interested in experimenting with cryptocurrency.
“While the risk asset drawdown is still in its very early stages, Bitcoin is on the rise as these risks are just beginning to show up in other asset and currency prices. Since Trump first announced the tariff hike in May, Bitcoin has generated a cumulative return of 104.8% through August 7, versus an average of -0.5% for the twenty other asset classes, markets, and currencies below during the same period,” the report reads.