The U.S.-China trade war began in January 2018 when import tariffs were applied to products from China. In July of that year, the price of Bitcoin (BTC) plummeted 31% from $8,487 to $6,000.
Now the U.S. and China are about to reignite a new trade war as the two nations fight over the origin of the coronavirus. President Donald Trump recently announced that the trade agreement signed in the first phase „doesn’t look the same to him,“ expressing his intention to walk away from it.
The price of BTC, CoinMarketCap’s most important digital asset, risks a major setback if a full-scale trade war between the two world superpowers breaks out again due to decreased institutional appetite and China’s large market share in the Tether (USDT) market.
The crisis over COVID-19 has encouraged and led to the widespread adoption of crypts
China represents a fairly large share of the
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According to a report by Diar in mid-2019, demand for Tether in China exceeded $10 billion as early as June 2019, representing 62% of all Tether inflows in the second quarter of last year.
Data provided to Diar by the blockchain analysis company „Chainalysis“ highlights the magnitude of demand for Tether in China with more than $16 billion received by exchanges in that market in 2018. This year the figure has already exceeded $10 billion, setting the stage for the biggest year yet. The 2019 flows to date on exchanges that deal primarily with Chinese traders exceeded $7 billion of the entire 2017 transaction value.
China’s share of the Tether market
In addition to the high use of Tether, two crypto-currency exchanges in China are reported to have received government approval to serve institutional investors.
The CEO of Sino Global Capital, Matthew Graham, wrote:
Increasingly, it appears that the case of China is that 1) Huobi and OKEx obtained some level of approval (institutionalization) 2) Binance and international exchanges were mostly frozen 3) Illegal brokerage exchanges (bucket shops) such as MXC and Biki were closed or are being prosecuted abroad
Japanese Exchanges react to the revision of the crypto laws that are now in force
Despite the strict ban on crypto currency trading, Chinese investors represent a fairly large share of the global Bitcoin market.
If capital inflows into China decrease as a result of intensified U.S. pressure, it is likely to cause a decline in the appetite for high-risk assets, including individual stocks and Bitcoin.
Historical data also suggests that increased geopolitical risks previously led to a sharp decline in the price of Bitcoin.