Crypto News | Will the Trade War Affect Cryptocurrencies?

Over the past couple of weeks, we’ve abstained from discussing day-to-day political issues and commenting on financial markets apart from the cryptocurrency market. Sadly, we can’t keep it up forever. A trade war is brewing, and it’s all about steel and aluminum. For those who couldn’t care less about what happens in the news, we bring you a simplified version of events – trade war for dummies, if you will. Everybody already knows about Trump’s slogan “Make America Great Again”, but there’s one more that can sometimes be seen behind him on rallies: “Buy American – Hire Americans”. Trump sees himself as a great dealmaker, and he wants to run America like he runs his business – by making bold, aggressive moves, hoping that other countries will respect America and its interests and let Americans get better deals and enter agreements that are more beneficial for America than those signed by Trump’s predecessors. That’s what he was trying to accomplish with the Paris Agreement controversy, as well as the Trans-Pacific Partnership, the U.S. – Mexico border wall, the travel ban, and now, the import tariffs he set on Thursday, all in an effort to negotiate “fair, bilateral trade deals that bring jobs and industry back onto American shores.” The tariffs, 25 percent on steel and 10 percent on aluminum, could spark a trade war with other countries, which could impose similar tariffs on American products in retaliation. Speaker Paul Ryan wrote against the move in an official statement on Monday, and Gary Cohn, Trump’s top economic adviser, offered his resignation on Tuesday.

But what does this trade war mean? First off, in the U.S., steel and aluminum will become more expensive, which means that all finished products that use steel and aluminum will be more expensive, as well – affecting consumers down the line. Think cars, tools, appliances, machinery – which will drive prices up across the board. There may be short-term benefits for domestic steel/aluminum producers, until they, too, get hit by the recoil. After retaliatory tariffs by other countries come into effect, everything will become more expensive, and workers, production and consumers will suffer. Earlier today, Chinese Commerce Minister Zhong Shan said that a trade war would spell disaster for the global economy.

If a new recession hits, where will investors and financiers run to in order to protect their assets? Could cryptocurrencies become a safe haven in times of turmoil? In a recent Forbes opinion piece, contributor Panos Mourdoukoutas reiterated Tyler Winklevoss’ mantra that Bitcoin is the new gold and that it always shines in times of extreme uncertainty. The only thing that might spoil the party is increased regulation. According to industry insiders, 2018 will be the year of regulation for cryptocurrencies. A new report issued by the Securities and Exchange Commision (SEC) warns about the dangers of unregulated crypto exchanges. Sooner or later, all exchanges will have to register with the SEC.

However, the European Banking Authority’s chief executive Andrea Enria stated on Friday that it is banks and financial institutions that should be regulated instead. He believes that overregulation could stifle innovation, an opinion shared by many.

Even so, in the same Forbes opinion piece we referenced earlier, Mourdoukoutas argues that government regulation is good for cryptocurrencies and, if Bitcoin continues to respond positively to SEC’s efforts, it could be a bullish sign both for Bitcoin and other digital assets, irrespective of tariffs, trade wars and worldwide financial markets.


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Author: Max Rothstein

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