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Trump’s Trade War Scores Hat-Trick, Affecting Incumbents, Fintechs and Crypto!

Posturing on both sides of the US/China trade dispute has unsettled the entire world economy so it’s little surprise that ripples are being felt in financial and crypto markets as well.

Michael Gapen, Barclays US Chief Economist, told Yahoo Finance on Tuesday that America is exposed to greater risk should hostilities persist;

“The U.S. is still basically a closed economy. Exports are only about 15% of GDP and we import more from them than they do from us, so relatively speaking, they have more to lose in this game.”

Ahead of Chinese Vice Premier Liu’s visit to the States later this week, Gapen appeared confident of a positive outcome all round.

“We still think both sides ultimately would like a deal that they can live with. I don’t think either side wants a tit for tat escalation in protectionism that will hurt growth and reduce confidence in financial markets and business”

Rupert Thompson, Head of Research at Kingswood, an SME financial advisor had this to say:

“The tumble in global stock markets is not a big surprise. Hopes of a US-China trade deal were a major factor behind the sharp rebound in markets this year and with Trump’s tariff threat now putting a deal in doubt, it is no surprise equities have taken a hit.

“We still think both sides ultimately would like a deal that they can live with. I don’t think either side wants a tit for tat escalation in protectionism that will hurt growth and reduce confidence in financial markets and business”

However, the 2% drop in global equities from their high has to be seem in the context of the 15% gain seen year-to-date prior to Trump’s tweets. It is hard to tell whether the latest ratcheting up of tension is just part of Trump’s negotiating tactics or there has been substantive backtracking by the Chinese to justify his intervention. Either way, it is still in the interest of both parties to reach a deal. And while the risks have certainly risen, on balance we still expect one to be reached – even if not in time to prevent a temporary hiking of tariffs on Friday.”

Trump’s trade war with China is not only affecting the big boys and the little guys, apparently it’s affecting the price of Bitcoin too, though not in the way you may first expect. Marcus Swanepoel, CEO at Luno explains;

“The increased rhetoric around the US and China’s proposed trade deal has hit markets hard with investors heading to the safe havens of the yen, gold and, it would appear, Bitcoin.  Despite a significant high profile hack of a major exchange reported this morning, buyers are still coming in for BTC, which remains above 5,700.

Sector analysts are all pointing to strong fundamentals and positive technical data which could signal that the coin has reached a new level and can now push higher again.  It may be significant that Bitcoin, at the moment, seems to attract investors when we switch to a risk-off main market.”

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