Here at BitOoda, we are always on the clock, monitoring the market and global developments to look for ways to help our clients. As we watch several fast-evolving global crises this weekend, we wanted to offer our thoughts on a complicated but important question in terms of the future growth of crypto and the role it will play in the global system: whether it will serve as an “escape” from the financial impact of instability in Asia and the Middle East. Will investors and asset managers turn to crypto as a hedge against volatility in other economic sectors, and what opportunities do we at BitOoda have to position our customers to take advantage of these dynamics?
The world is closely watching three areas of global instability: (1) the protests in Hong Kong over a proposed extradition law that also would allow Chinese authorities to seize financial assets, (2) an escalating U.S.-China trade war that has the world’s two biggest economies poised for macroeconomic slowdown, and (3) tensions with Iran that spiked oil prices on Friday given the risk to international shipping and oil supplies through the Strait of Hormuz. The question on our minds is whether these conflicts will cause a significant pivot to the crypto sector to protect assets from volatility elsewhere. We are watching for a dynamic similar to the one we saw with increased crypto demand from Venezuela and other developing nations experiencing hyperinflation or instability, with asset holders in Hong Kong and the energy sector possibly shifting their focus to crypto and other assets unaffected by this unrest. The rise of gold prices amid uncertainty about the direction of the U.S.-China trade war and the Middle East tensions is one data point as we explore similar trends in crypto.
How will these shifts affect the markets for BTC, stablecoins, and even privacy coins? While it is probably too early to confidently discern an answer to that question, we have seen some indicators of increased demand possibly resulting from these geopolitical developments. Our contacts in Asia report a rise in bids for privacy coins surrounding the Hong Kong protests, we saw an issuance of 150,000,000 USDT (Tether) on June 11, and this weekend we continue to work an increased volume in BTC buying. In addition, one analyst demonstrated a recent rise in the popularity of BTC in China by comparing keyword search trends (such as “trade war” and “USD/RMB”) in Google and Baidu (the version of Google in mainland China).
What do we see happening next? As the Hong Kong protests die down with the government’s decision this morning to delay consideration of the proposed bill, we expect that the nascent trend of Hong Kong residents shifting their wealth outside the city will continue, given persistent tensions between Hong Kong and Beijing over the city’s degree of autonomy from Beijing, and China’s broader economic slowdown. We will continue to monitor that trend to assess whether any geographic financial shifts are accompanied by a shift to crypto. One reason we are in wait-and-see mode when it comes to Hong Kong is that Chinese authorities are censoring online content and blocking some social media apps where we would expect to see increased traffic in the crypto sphere, such as Telegram. We expect the primary impact of the current MidEast flare-up will remain in the oil markets, but we will continue to monitor indications of a spillover into crypto.
While it is difficult to definitively tie crypto market shifts to broader global dynamics, we are nonetheless actively developing strategies for BitOoda to optimize our customers’ positions. Please read our Monday email for more insight on these strategies and opportunities.
BTC Price & Market Cap since the most recent attacks on oil tankers and the protests in Hong Kong
Gold Price since June 11