As the price of Bitcoin is climbing slowly, a compromise may have to be reached in the face of the unfolding situation between a Donald Trump-led US and China for the earlier projected $2,000 price range for Bitcoin in 2017 not to be just a starter in months to come.
A looming trade war between the two countries would favor Bitcoin. However, the extent to which the war would last will only be determined by which of the leaders of the two biggest economies in the world to back down first on their policy statements.
Another considered scenario could be that the US would make efforts to contain China. According to Victor Zhikai Gao, a leading Chinese expert on international relations and chairperson of the China Energy Security Institute, this could backfire and escalate the doctrine of mutually assured destruction.
The state of the US-China relationship
So far, the US-China relationship has had some tension in the last few days. The new US president has signed into law a new national day of patriotism, and in a separate statement on the White House website, said he intends to develop a “state of the art” missile defense system to protect against attacks from Iran and North Korea. In response, Iran is planning to dump the US dollar now.
Trump also called for an immediate “regulatory freeze” to prevent federal agencies from issuing any new regulations. His focus is on a resolve to have a nationalistic vision for his country, a view that is somewhat counterproductive to the Chinese leader’s whose idea of a globalized world does not seem to be appealing to Trump.
At Davos, Xi Jinping spoke in defense of an open and globalized international economy which his country’s economic performance and the stability of his regime depend on, according to British historian, author and Professor of European Studies at Oxford University in his latest piece for The Guardian.
We are in for a dangerous and rough ride over the next few years, we’d better be ready for it, writes Timothy Garton Ash as he dissects the early hours of Trump’s assumption into office and summed it up with the keyword: confrontation.
An editorial in the Global Times, a state-run tabloid, says: “Frictions between the US and its allies as well as trade tensions between the US and China seem inevitable within the four years ahead. Undoubtedly, the Trump administration will be igniting many ‘fires’ on its front door and around the world. Let’s wait and see when it will be China’s turn.”
The confrontational tendency will likely continue to take a toll on the global economy until the US and China work out a term.
Considering all that has been happening to the Chinese yuan in the last few months, China seems at a more disadvantaged point than the US.
A further weakening of the yuan will see more capital outflows which will see more Bitcoin uptake not only in China but in several other parts of the world where the effect of a strengthened dollar is a constraint.
The case would be the same if the dollar faced a similar predicament.
Other factors to influence Bitcoin price
In reality, we should understand that the Trump factor is just an addition to the various anticipated events that are expected to affect the price of the digital currency.
Several issues are springing up on the corporate scene which are expected to enhance the adoption of Bitcoin and push its price higher. We have the debate over the activation of SegWit, ETFs getting approved and the several new use cases springing up here and there.
The economic showdown in Europe has started but it hasn’t really gone too far. Africans are warming up to the reality and we all know what is going on in South America.