- Bitcoin has had a dramatic surge in the past week, rising almost 40 percent
- The spike in BTC price is complemented with a slump in global stocks markets
- S. China tariff war adding to the woes of financial markets the world over
The world’s oldest and largest cryptocurrency bitcoin is making a strong case for itself as a hedge against traditional stocks markets, reports CNBC, May 13, 2019.
Bitcoin Spikes While Stocks Plummet
The recent surge in the price of bitcoin has undoubtedly created a positive sentiment within the crypto community after a long time. Bitcoin, which started its slump sometime during November 2018 today, crossed the crucial $8,000 figure. The cryptocurrency last touched this figure in August 2018. On Monday, May 13 itself, bitcoin was up an impressive 15 percent.
The rise in the price of bitcoin is in stark contrast with the tepid performance of stocks markets the world over. As reported by Blockchain Reporter, the U.S. China trade war seems to be on the brink of boiling out as on May 13 China said that it would increase tariff from 10 percent to 25 percent on about $60 billion worth of U.S. goods. These goods include American cotton, and airplane parts, among others. This has also lead to the Chinese Yuan tanking in price which has consequently made alternative investment asset classes more attractive.
Andy Brenner, Head of International Fixed Income, National Alliance said:
“If you were in China and you wanted to diversify, it would seem logical that bitcoin would be a short term alternative.”
“While we do not see the direct flows of who is buying bitcoin, we can see that the bid for bitcoin in this latest run has coincided with a big down tick in the value of the Chinese Yuan versus the dollar.”
BTC Outshines Gold
According to data from crypto research website CoinMarketCap, at the time of writing, bitcoin was trading at $8,191 with a total market cap slightly above $144 billion. The cryptocurrency is up 20 percent in the past 24 hours and looks set to shatter more key resistance levels.
Conversely, the Dow fell as much as 696 points on May 13 for its biggest one-day loss since January 2019.
Even gold, the precious metal that has the distinct tag of being the “safe-haven” asset to hedge against traditional stocks markets paled in comparison to the surge in bitcoin’s price. The metal only rose as much as one percent on Monday.