These 3 Macroeconomic Factors Are Driving Bitcoin Price Above $12,000

Bitcoin has staged a significant rally in recent days, but the reasons behind it could mean higher prices stick around much longer

With BTCUSD back above $12,000, CoinTelegraph's William Suberg lays out three of the main reasons the cryptocurrency industry considers lie behind Bitcoin’s latest surge higher.

1. Global stocks are tumbling

As Cointelegraph continues to report, the ongoing impact of the United States-China trade war is increasingly considered a boon for Bitcoin. 

On Tuesday, as tensions continued, stocks around the world showed considerable strain. As serial investor Tim Draper noted, the Dow Jones and Nasdaq fell by 2.9% and 3.4% respectively. For the Dow, it was the worst trading day of the year.

At the same time, Bitcoin gained 3.2%, the latest in a series of rebounds which ended several weeks of bearish sentiment. Just a week ago, BTC traded closer to $9,500.

2. Investors are waking up to Bitcoin as a hedge

Current price performance is fuelling attitudes that Bitcoin is becoming increasingly useful as a hedging instrument.

As cryptocurrency and blockchain lawyer Jake Chervinsky noted on Tuesday, this quality is an essential use case, with Bitcoin designed to reduce dependence on the centralized financial system.

“Bitcoin is doing exactly what it's designed for today,” he summarized. 

His comments were echoed on mainstream media, with the CEO of consultancy firm Agecroft Partners telling CNBC Bitcoin’s hedging properties will make it a firm favorite for funds in future.

3. Bitcoin profits from fiat currency blame games

As part of the trade war, the U.S. this week described China as a currency manipulator. The accusation came after Beijing significantly changed its policy of supporting the yuan, allowing it to slide against the dollar.

This in turn allowed China an unfair competitive advantage in global trade, treasury secretary Steven Mnuchin claimed. China retaliated by warning the U.S. was “deliberately destroying international order.”

For the average investor, an alternative thus makes perfect sense, Hayman Capital Management founder Kyle Bass explained to mainstream media.

“If you’re in Asia and China and you’re in a closed currency system, or if you’re in Hong Kong and you can’t seem to get a big conversion of Hong Kong dollars to U.S. dollars what are you going to buy?” he said in an interview with Yahoo! Tuesday.

As Cointelegraph reported, Jeremy Allaire, CEO of crypto payments firm Circle, also thinks the situation is spurring on Chinese investors to interact more with the cryptocurrency market.

“Humanity has now created a non-sovereign, highly secure mechanism to store value that can exist anywhere the internet exists,” he told CNBC Monday.

Additionally, the proxy for 'policy-maker-idiocy' - the volume of negative-yielding debt worldwide - is thrusting higher as global markets turmoil and that suggests Bitcoin (and gold) have further to run...

And in case you needed some proof of the demand for Bitcoin from overseas populations in fear of policymakers, CoinTelegraph's Marie Huillet notes that following President Trump's decision to freeze all Venezuelan government assets, trading volume on LocalBitcoins in Venezuela has surged to a new record high...

Weekly volume for Bitcoin against the Venezuelan Bolivar. Source: coin.dance

We suspect China's 'local' volumes are following the same path of Hong Kong too...