U.S. President Donald Trump announced a trade war with China Friday, which means that they has started hiking tariffs on Chinese exports worth of $200 billion from 10% to 25%. But on the very same day, Bitcoin price has also got a bump to more than $6000. Right now, except date these two events are not looking connected. But, according to Ed van der Walt, there can be a connection in between these two.

The Bloomberg reporter came with a theory that investors used Bitcoin as “trade-war play,” stating that the decision President Trump made on Chinese imported goods traffics increase, it could make geographic price differences.

“Tariffs create geographic price arbitrages, which encourages smuggling, which drives money off-grid, which fuels bitcoin,” said Walt in his thoery.

Bitcoin Smuggling Theory

Walter’s did a question-cum-analysis in which he used criticism of bitcoin as tool that helped him to drive underground economies. Once JP Morgan CEO Jamie Dimon said that Cryptocurrency is nothing but a fraud, and it attracts only criminals. Russia President Vladimir Putin creating the same ton as JP Morgan said that, Bitcoin is just a way to launder funds, evade taxes and finance terrorism.

But if you are considering that it was the smugglers who were the reason behind bitcoin bottom formation in December 2018, it seems doubtful. Specifically when you can see other fundamental factors in its growth such as the one propelled by Fidelity Investments. The Boston-based asset management firm recently announced that they will be offering Bitcoin trading to their institutional clients. Right after the announcement, Bitcoin’s rate jumped over a pscychological level, above $6,000.

What About MACROECONOMIC FUNDA?

Caused by the US China trade war, investors are getting prepared for the upcoming macroeconomic shortcomings or more than shortcomings. The International Monetary Fund (IMF) warned the whole world last year that the clash in US and China could leave the word move poor. President Trump’s latest decision on tariffs increase can even put global finance in a bad shape.

A senior economist at London-based Capital Economics, Julian Evans-Pritchard said that China can also respond by doubling tariffs on US goods.

“They have a 25% tariff on agricultural commodity imports from the US, they could double that potentially,” he told CNBC. “I think it’s a balancing act for them. They want to retaliate for political reasons. But actually, in economic terms probably, their best option would be to do nothing.”

What Jacob Parker believes is that the fallout in both countries economies will leave an impact on US Consumers. Vice president of US-China Business Council showed anger to the US Industry and farmers, saying that they can face the maximum heat.

“It will decrease the competitiveness of American companies, reduce the efficiency of their global supply chains, and reverberate through the US economy. Pure and simple, this is a tax on the American consumer,” Parker told CNBC.

BITCOIN PRICE WILL RISE

The regional investors may unload their portfolio risks to bitcoin because of these weak fundamentals in both the US and China. In the US, there are the maximum number of bitcoin traders, the cryptocurrency demand can even grow as the the Federal Reserve prepares the soft-landing pad for the economy. Which also means that it will make interest rate reduce, and the borrowing cheaper. This will be a move that many analysts believe that it will protect investors more in bitcoin.

Walt suggested bitcoin’s potential as an ongoing demand by smugglers. But, as stated above, the cryptocurrency could be more than an underground financial system.

Right now the bitcoin price is trading above $8,600 at the time of this writing, which is a hit after 8-month high near $7,500.

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