China's stock market plunged after reopening after the long Lunar New Year holiday. The CSI 300 Index plunged 0.6%. Meanwhile, the Hang Seng China Enterprises Index plunged more than 2% after jumping 3.5% the day before, with e-commerce companies being the hardest hit sector.
The situation worsened after reports of the US Postal Service temporarily suspending package deliveries from China and Hong Kong. The move came after China and the US imposed new tariffs on each other's imports.
This is because, despite the hope that a trade deal can be reached, high uncertainty has made investors choose to reduce their investment risks.
"The trade war between the US and China appears to be escalating, and the current tariff policy may be just the beginning of further escalation," said Xin-Yao Ng, investment director at abrdn Plc in Singapore.
On the other hand, US President Donald Trump said he was in no rush to talk to the Chinese President. Meanwhile, the Chinese yuan exchange rate weakened 04% at the same time.
Thus, escalating trade tensions, as well as weakening stocks and the yuan, could have an impact on the cryptocurrency industry, as investors may turn to digital assets such as Bitcoin (BTC) as a hedge against traditional market volatility.
-# Image Source: Reuters