Bitcoin Price Again Defends $10K as U.S.-China Trade War Escalates

Bitcoin

Bitcoin’s price flipped green on Sunday, as the largest cryptocurrency continued to defend critical support amid escalating trade-war tensions between the United States and China.

BTC/USD Update

The bitcoin price traded as high as $10,355.89 on Bitstamp for a gain of 2% on the day. At the time of writing, the BTC/USD exchange rate was up 1.1% at $10,260. Immediate resistance is likely found around $10,570, a level that corresponds with the 30-day exponential moving average (EMA).

BTC Price
Bitcoin (BTC/USD) is trading comfortably above $10,000 again, but underlying momentum remains weak. | Source: TradingView.

Bitcoin has successfully defended the $10,000 level several times over the past week, possibly signaling the end of a downward correction that began in mid-July. The price is down roughly 25% from the June peak.

For the crypto bulls, consolidation may not be a bad thing. Bitcoin gained a whopping 350% between December and June. While gains of that magnitude aren’t uncommon for BTC, they are unsustainable for extended periods.

As Hacked reported back in April, bitcoin entered a new four-year cycle following the cyclical low near $3,100 in December 2018. The four-year cycle will likely produce new highs for the leading cryptocurrency, but not without long stretches of consolidation and correction.

From April:

“Bitcoin will likely see long periods of consolidation followed by sharp reversals that could shake out over-leveraged positions and those who entered the market over a fear of missing out.”

Read: Bitcoin, Bakkt and Ethereum Classic Headline Volatile Week for Crypto Industry

Bitcoin Reacts to U.S.-China Trade War

An escalating trade war between the United States and China has put stock markets in a tailspin, the latest evidence being Friday when the Dow Jones Industrial Average shed 623 points following a series of Trump tweets. In the process, gold rallied almost 2% to close at $1,537.60 a troy ounce.

Now, for the first time, it looks like bitcoin reacted sharply in real time a U.S.-China trade war headline, according to cryptocurrency analyst Alex Kruger.

 

In Kruger’s view, bitcoin’s price reacted sharply and in real-time to a series of tweets from President Trump vowing to respond to China’s newly announced tariffs on $75 billion worth of American goods. In those tweets, Trump told American businesses to look for “an alternative to China” and shift their production back home.

As a non-correlated asset, bitcoin rarely reacts to events outside of the cryptocurrency industry. The large green bars that followed Trump’s tweetstorm suggest investors view bitcoin as a hedge against economic and political turmoil.

Earlier this month, bitcoin was found to be trading in lockstep with gold roughly 58% of the time over a three-month period. As Bloomberg pointed out, “the evidence is growing that investors – rightly or wrongly – see bitcoin as a refuge in times of turbulence.

The U.S.-China trade war, now entering its second year, is unlikely to be resolved anytime soon. Issues over Chinese industrial policy, intellectual property rules and enforcement mechanisms stand in the way of a comprehensive agreement.

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock. Chart via TradingView.

Author:
Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi