The recent tariff increase between the US and China highlights the sensitivity of cryptocurrencies to global trade relations.
Rising Tariffs and Their Impact on Financial Markets
The trade relations between the US and China are worsening as the US imposed a **104% tariff on Chinese goods**, provoking **34% retaliation** from China. This is causing volatility in the global financial markets.
Cryptocurrencies and Economic Changes
The escalation of tariffs has immediate consequences for **cryptocurrency values**, with Bitcoin and Ethereum experiencing price drops. **On-chain liquidations** exceed $50 million, indicating significant financial strain on investors holding long positions.
The New Role of Cryptocurrencies Amidst Instability
Cryptocurrencies may play a crucial role as **wealth preservation tools** if trade tensions persist. According to **Arthur Hayes**, co-founder of BitMEX: "The ongoing trade war could trigger a capital flight from China, with crypto becoming a popular alternative for those seeking to preserve their wealth."
The escalation of tariffs between the US and China underscores the need to consider geopolitical factors in investment decisions, especially in the realm of cryptocurrencies.
