Amid the US-China trade war, the bitcoin has seen some major increase in its value. Experts argue that the bitcoin, unlike gold, Japanese yen or government bonds is not a safe haven for investors, but it does provide you with some quick gains.
The bitcoin increased 7pcin value on Monday the 5th of August as the US stocks plummeted by 3pc. Experts argue that investors see bitcoin as immune from geopolitical fluctuations because of its decentralized nature. Unlike most strong currencies, nobody owns bitcoin, rather bitcoin is mined worldwide and its production is capped at 21 million, so this increase in demand and a fixed supply result in massive gains for the investors.
The main reason for this increase in the value of bitcoin is the uncertainty in the global markets amid the US-China trade war. Moreover, amid the decreasing corporate earnings due to the trade war, the bitcoin increased by more than 300pc in value after January 2019. The value of 1 bitcoin on January 1, 2019 was PKR 515,937.44 and at the time of writing has increased to PKR 1,848,352 (8th August 2019).
Experts say that when tensions or uncertainties rise in the global markets, investors invest small portions of their money in bitcoin. In addition to that, if the price of bitcoin falls, investors don’t lose that much money, but if the price rises, investors hit a home run, said Marcus Swanepoel, CEO of London based cryptocurrency platform Luno.
According to experts, the value of bitcoin, just like gold, is directly proportional to the market volatility. However, the upward trend in the value of bitcoin is for a shorter time period, unlike different investment safe havens.