The United States and China are still very much at loggerheads and this dispute may not be resolved anytime soon. The trade war between the two economic giants has been noted as one of the many reasons behind Bitcoin’s recent rally because Chinese businessmen may have moved to Bitcoin in the fear that the Yuan would take a major hit. Now, it would seem like there is another way Bitcoin and other major altcoins could gain considerably from the dispute.
For many nations all over the world, U.S Treasuries have been a very secure and dependable store of value apart from gold. A lot of the time when there are periods where nations go through a significant crisis or at least when the threat of one looms, they turn to U.S. Treasuries to keep said funds. This is usually done to retain the value of the funds, amongst other reasons.
Its therefore not surprising that since the trade war got a bit heated, these treasuries have been increasing in value and so has Bitcoin also. China specifically has at least a trillion sitting in U.S treasuries as a way to uphold strategies that help manage the dollar. However, there’s now a chance that the government just might be disposing of these funds.
How Would This Benefit Bitcoin?
According to Ruggero Gramatica who is the CEO and founder of Yewno, a move like this from the Chinese government could be very advantageous to Bitcoin. Gramatica explained that:
“Upon US bonds sell-offs, money would then flow to other Treasury bonds. The two biggest rivals to U.S. Treasury are German bonds and Japanese government bonds. However, both of those papers have low-yield returns than US bonds.”
Normally, the next option should be gold as it has a history of usage in these circumstances. However, the problem with gold is that it’s very expensive to move around, is not very readily liquid and has poor yields. This ultimately would mean that Bitcoin is up next.
Speaking on Bitcoin, Gramatica explains that:
“Bitcoin, however, can observe a surplus of money flow as an alternative store of value pushing cryptocurrencies prices up. Bitcoin, and consequently other cryptocurrencies, is arguably a superior store of value due to its durability, limited supply, predictable inflation and ease of transfer.”
Would China Actually Do This?
It’s somewhat unlikely that China would actually decide to tow this line as it may not be very profitable. If the Chinese government decides to do this, China would be forced to look for less desirable ways to hold funds and definitely would not like the crypto idea as the country is widely known to be very unsupportive of cryptocurrency.