Brian Kelly, founder, and CEO of BKCM LLC, a digital currency investment firm, counsels investors to safe bet their money on bitcoin in case of a trade war. There is a building fear of an impending trading clash after US President Donald Trump hinted that the US would impose 25 percent duty on steel and aluminum.
Bitcoin is the New Hard Asset
In cases like those mentioned above, government-backed currencies tend to depreciate. This depreciation is in fact exactly why Kelly is so bullish on assets like bitcoin.
In the case of a trade war, there would be no effect on decentralized currencies like Litecoin or Monero, at least not adverse effects. Bitcoin may even experience a price surge if traditional investors pump their money to crypto space to overcome fears of a currency war. Kelly reported that:
“Bitcoin has a fixed supply. It acts exactly like a hard asset, exactly like a commodity.In the trade war, it does well.”
Not long ago, the host of CNBC’s “Crypto Class,” a program that offers tips on cryptocurrency investments, advised investors to invest one to five percent of the total investable funds into Bitcoin.
Referring to the fear of trade war, Kelly iterated that “In this environment, I want to own those things that are deflationary and fixed supply in an inflationary environment.”
In the first week of February, bitcoin dropped to $6,000 mark, since then it is experiencing steady growth, something opposite to its volatile nature. The steady increase also indicates a maturing bitcoin ecosystem.
Bitcoin to Replace Gold
On March 2, 2018, the US President, in an uncooperative tone, tweeted his support and confidence in a global financial standoff.
When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!
— Donald J. Trump (@realDonaldTrump) March 2, 2018
Business partner countries like Canada, France, and China have signaled to retaliate in the case of a hostile duties tax imposed by the United States. The US government’s move to impose taxes on steel and aluminum have already reflected poorly on Dow Jones industrial average and S&P 500.
To the extent that the new crypto asset class can mitigate these global economic disputes, makes bitcoin all the more enticing.
In a time like this, Kelly suggests investors should seek to hard assets. In the past gold was one the most popular physical asset. However, he says “But you know what, now we have bitcoin, [bitcoin] is the new gold.”
Investors have the option secure their wealth by owning certain cryptocurrencies, as the decentralized currency is not government endorsed. Hence it would be excluded by any of the consequences of Trump’s proposed trade war.