BITCOIN AND THE TARIFF WAR

INTRODUCTION

“When elephants fight, it is the grass that suffers.” In the past, tariff wars—also known as trade wars—between two countries usually sent investors scrambling for safety, particularly when they involved two of the world's largest economies—such as the U.S. and China. Trade wars of this nature drove investors to seek refuge in safer assets like gold. Historically, during such conflicts, the stock market dipped, the price of gold surged, and more recently, the price of Bitcoin followed a similar upward trend. However, this time Bitcoin hasn't flinched. Despite the rising tensions and heavy tariffs, Bitcoin has remained unexpectedly silent. What could be the reason for this silence? Could this event be another milestone in the evolution of Bitcoin?

THE USUAL PATTERN: TRADE WARS AND THE FLIGHT TO SAFETY

Over the years, trade wars usually sent investors into a frenzy. This often led to stock market crashes, and placed downward pressure on fiat currencies. In response, the demand for traditionally secure assets —such as gold—soared. A clear example of this playing out was during the U.S.–China trade war that lasted from 2018 to 2020. In that period, market volatility surged. Stock markets saw sharp fluctuations after each round of tariffs, and global indexes—such as the S&P 500 and Dow Jones—dipped on negative trade news and rebounded slightly on signs of negotiation. At the height of the conflict, investors turned to safer alternatives such as gold and U.S. Treasury bonds to secure their assets. It was also during this time that Bitcoin gained traction as ‘digital gold,’ as many investors saw it as a way to escape the market uncertainty and currency fluctuations. Evidently, this caused a hike in the price of Bitcoin in 2019, rising from $4,000 to $13,000. However, despite the fact that the trade war caused short-term volatility in the crypto market, the price of Bitcoin appreciated in the long-term. 

WHY IS BITCOIN NOT REACTING THIS TIME?

Bitcoin's quiet response could be attributed to several key factors.  

• Bitcoin has evolved to become an established store of value, so it is hardly affected by short-term events like trade wars.
• Today, traditional financial institutions are increasingly involved in Bitcoin, contributing to its growing stability and reducing its vulnerability to external shocks like trade wars. Notable examples include BlackRock, which launched a spot Bitcoin ETF to provide regulated exposure to the asset, and Goldman Sachs, which reopened its crypto trading desk and now offers Bitcoin-linked investment products.
• Bitcoin is less related to traditional trade markets, hence reducing the impact of the trade war altogether. 

WHAT DOES THIS SILENCE REVEAL ABOUT BITCOIN'S TRANSFORMATION?

Bitcoin is evolving beautifully as an asset and is gradually transitioning from a speculative asset into a macro-sensitive one. This means that nowadays, Bitcoin only reacts to broader macroeconomic indicators, such as interest rate changes, inflation data, and monetary policy decisions—which is similar to other traditional assets like gold. It is no longer a speculative asset that wavers at every hype, news speculation, or geopolitical tension. This maturity stems from Bitcoin’s growing adoption into the global financial system. However, this silence and resilience from Bitcoin marks a maturing phase in its evolution. It also shows deeper market infrastructure, an increase in investor confidence, and Bitcoin's slow emergence as a long-term hedge instead of a temporary shelter for short-term investors.

CONCLUSION.

Bitcoin's quiet reaction to the present U.S.-China tariff war marks a basic change in its character overall. Bitcoin is showing signs of maturity, reacting less to isolated political events and more to global economic principles rather than being driven by speculation or short-term news headlines. However, several other factors—currency devaluation, escalation of the trade war, capital controls or sanctions, and regulatory development—could still change Bitcoin's nonchalant stance towards the U.S. vs. China trade war. So it may still be too early to conclude that Bitcoin is now a classic safe haven asset like gold. Ultimately, as the global scene changes, one must question: Is Bitcoin really becoming digital gold, or is it just waiting for the next crisis to expose its true nature?

REFERENCES 

1. Council on Foreign Relations. (n.d.). Timeline: U.S.–China trade war. From https://www.cfr.org/timeline/us-china-trade-war

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3. Bloomberg. (2019, June 25). Markets swing on trade tensions. From https://www.bloomberg.com

4. CNBC. (2020, March 3). S&P 500 and Dow reactions to trade war news. From https://www.cnbc.com

5. CoinDesk. (2019, June 26). Bitcoin price rallies on U.S.-China tensions. From https://www.coindesk.com/markets/2019/06/26/bitcoin-price-rallies-on-us-china-tensions

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