Bitcoin Price Tumbles 6% on Economic Growth Uncertainty

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Bitcoin (BTC) had an outstanding run during the first half of the year as it climbed to new highs at the end of each month, but the month of July and August have not been as kind to the world’s biggest cryptocurrency. A lot has gone on over the past month and a half that has made it difficult to regain its momentum.

However, in August, Bitcoin started climbing considerably as it was thought to have been a hedge against the global risks that had been unleashed due to major macroeconomic factors. The biggest factor in this regard was the trade war between the United States and China.

Multiple Factors

As everyone knows, the trade war escalated significantly over the course of the past few weeks, and there were genuine concerns that it was going to escalate further. The United States President Donald Trump imposed fresh tariffs on Chinese imports and Beijing retaliated by devaluing its own currency. In such an uncertain investment climate, Bitcoin was being used as a hedge against such uncertainties, and naturally, its price climbed. However, it has now emerged that fresh tariffs are not going to be imposed until December (instead of September) and that has given rise to hopes that the trade war could be resolved.

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Hence, Bitcoin lost its unique selling point for many investors, and its price crashed today. The price of the token went below the psychologically important level of $10,500, and that is particularly alarming considering the fact that the hopes of investors over the weekend had soared. At one point, the token was threatening to touch $12,000 and further. Despite the current situation, it needs to be kept in mind that the world’s two biggest economies looked like they were reaching a resolution of sorts, and then it all went haywire. In May, the two sides walked away from the table after being on the brink of an agreement. Hence, it must be said that hopes of a total resolution could well be a bit too optimistic.

Featured image: DepositPhotos © sdecoret

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