Mr Peter Bookvar of Bleakley advisory group views Bitcoin as a great bet to bank on in the face of the China-US trade wars. The chief investment officer is more a fan of Gold as a store of value, but values Bitcoin as an indicator.
To him, a sharp rise in Bitcoin prices indicates that the investors are unsure of the Federal reserve’s stance on interest rate cuts as well as the final outcome of the simmering China-US trade tensions that have dealt a heavy blow on both Asian and western markets.
Speaking to CNBC, Mr Bookvar had this to say about Bitcoin;
“I watch Bitcoin as a signal, not because I want to own it because I’d rather hold gold as an alternative currency,” he also added that the price of Gold had risen to unprecedented levels in more than a year since the price of Bitcoin skyrocketed.
“I don’t recommend buying Bitcoin in either direction because I don’t care for it as an asset, but I do care for it as a signaling mechanism that I think was a tip-off in the bounce in gold.”
Indications that the FED rate was a big factor in the prices of Gold and Bitcoin were seen when President Donald Trump announced that he would hike duties on $200 Billion worth of Chinese imports, a week later, China pulled a similar move by hiking duties on $60 Billion worth of US imports. This saw the price of Bitcoin surge by more than 45% to touch highs of $8,195 on Coinbase.
Gold experienced an almost identical rally reaching a nine-week peak of $1,334.10, after FED chair Jerome Powell issued concerning comments amid rising China-US trade tensions.
“We do not know how or when these issues will be resolved,” he said. “…As always, we will act as appropriate to sustain the expansion, with a strong labor market and inflation near our symmetric 2 percent objective.”
Senior economist at CIBC Capital Markets interpreted the words of the Bleakley investment group’s Chief executive officer to mean that the US central bank could lower investment rates if the ongoing tensions between US and China were to persist.
“Since the last Fed meeting on May 1st, trade tensions have increased, causing concern among many officials that the outlook could warrant a rate cut if economic data deteriorate as well.”
Mr Bookvar had predicted a similar scenario and added that a further rate cut would weaken the dollar but strengthen Gold. As far as his views on Bitcoin go, the digital currency is too nascent to be backed on as a store of value; he favors Gold instead.
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