#TradeWarEases
US-China trade deal could shed light on Bitcoin’s use case: Trader
The trade uncertainty was driving Bitcoin momentum, it should stop outperforming once a trade deal is announced, says an analyst.
Bitcoin’s potential price reaction to a trade deal between the United States and China could give insights into whether Bitcoin is being used as a safe-haven asset in the current market.
Bitcoin
$104,398
outperformed stocks and held up “incredibly strong” during a sharp sell-off on stock markets in April, following Donald Trump’s announcement of tariffs on “Liberation Day,” observed crypto trader “Daan Crypto” on May 11.
Following its plunge to $75,000 on April 7, Bitcoin recovered strongly to trade 27% higher at around $95,000 by the end of the month. Meanwhile, indexes like the S&P 500 and Nasdaq declined in April.
At the time, people wondered if Bitcoin’s relative strength came from the narrative that countries were using Bitcoin to bypass tariffs. The analyst said the opposite should theoretically occur if the trade deal is confirmed.
On May 11, the White House announced that talks between the US and China regarding a trade deal have made “substantial progress.” However, no official agreement had been announced.
“Theoretically speaking, if the trade uncertainty was what was making BTC outperform, it should stop outperforming after we hit the most important deal, which includes China
Some analysts, however, believe that Bitcoin will likely jump if a trade deal comes through, along with potential rate cuts.
“We believe that institutional investors are less apprehensive about investing in Bitcoin and crypto as US-China trade talks come to a conclusion and the likelihood of rate cuts increases,” Jeff Mei, chief operations officer at BTSE, told Cointelegraph.
Meanwhile, Jupiter Zheng, researcher at HashKey Capital, said, “A US-China trade deal could signal stability in global markets, potentially driving investors to seek growth opportunities and send capital into alternative assets.”
