It seems like the Crypto-markets never seem to catch a break. As soon as Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC) and Ripple (XRP) showed some signs of recovery after a brutal Easter Sunday nose dive, the markets are once again affected by global politics and trade wars between the United States and China. One can argue that since the cryptocurrency markets are being affected by mainstream global trade tussles, then this qualifies them as recognizable assets like any other stock, commodity or bond out there. In a sense, the relationship with global events does validate cryptocurrencies in an indirect way.
Market analysis puts bitcoin at $6,825 and down 9% from a recent high of $7,503 on Tuesday, 2nd April 2018. The last 7% drop has been witnessed in the last 24 hours. Ethereum on the other hand is currently trading at $381 and down 8.85% from a Tuesday high of $418. The last 24 hours has seen it drop 5,9%. Litecoin (LTC), even with the Abra News, has failed to maintain levels above $120 and is currently trading at $119: 12.5% down from a Tuesday high of $136. LTC has dropped 7.44% in the last 24 hours.
Ripple (XRP) has also not been spared. The current market price of XRP is $0.495: 12% down from a Tuesday high of $0.562. XRP has since dropped 7.62% in the last 24 hours.
So what is going on between China and the United States?
It all started when the President of the United States, Donald Trump, went ahead to propose a 25% increase on tariffs on some 1,300 industrial technology, transport and medical products from China, to try to force changes in Beijing’s intellectual property practices. Of particular interest would be steel and aluminium imports from China that would be taxed 25% and 10% respectively, aimed at boosting the American domestic production of steel and aluminium and also at increasing jobs in the country.
In a Tweet on April 2nd, President Trump went ahead and said:
‘We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S. Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion. We cannot let this continue!’
From the point of view of President Trump, it is not a trade war. But rather an attempt by the United States to recover what has not been compensated from Intellectual Property that is usually given to China whenever a foreign company wants to do business in their territories and especially in manufacturing. Also to mention are accusations by the US towards China on Espionage and theft with respect to Intellectual Property and Technology.
China has on the other hand, not taken President Trump’s ‘threats’ lightly. They too have counter proposed a similar increase of 25% on American imports including soybeans, planes, cars, beef and chemicals. China responded within 11 hours of Trump issueing his tariff proposals.
But if history is to go by, such utterances by Super Powers is usually the precedence of bilateral talks rather than a full blown trade war that will hurt not only the two countries, but the rest of the world through a disruption of global trade. In the words of my primary school teacher, the two countries are ‘flexing their muscles’.
As a result, the stock market has dropped since signs of the trade war started. The Dow Jones industrial average fell 500 points with energy, industrial and materials sectors leading the decline.
Our cryptomarkets have not been spared as earlier mentioned. But once again, if history is to go by, the market will recover at its own pace for Cryptocurrencies are border-less in that they are decentralized and no one government controls them directly. They might even end up being the investment preference of regular stock market investors who are fearing and all out trade war.
[Photo source: themerkle.com]
Follow us on Telegram