Bitcoin is faltering and shares are falling due to Trump's China Speech

Bitcoin falters and stocks drop for Trump's China Speech - New BitcoinsBitcoin bulls are taking a breath in the nervousness of traditional markets due to growing tensions between the United States and China.

Will current geopolitical tensions affect Bitcoin prices?

The world's largest cryptocurrency is trading around $ 9.400 as of press time, after hitting an eight-day high of $ 9.620 on Thursday May 28. While bitcoin seems to be lulling over recent gains, the main European stock markets are not showing enthusiasm for the current situation.

Markets moved cautiously last week, waiting to hear President Trump's response to China's decision to implement a national security law in Hong Kong, which calls into question the autonomy of jurisdiction.

The expectation is that Trump will announce some symbolic sanctions against people and companies. Having said that, with the presidential elections to be held in November, broader action cannot be ruled out. The resulting geopolitical tensions could favor bitcoin as many analysts and investors consider it a safe haven asset.

A "perfect storm" for Bitcoin

Meanwhile, analysts from Stack, a provider of cryptocurrency trackers and index funds, believe that geopolitical tensions have created a "perfect storm" for cryptocurrency.

In a report last week, they suggested that the cryptocurrency's weekly earnings are the result of rising demand fueled by US-China tensions and the falling yuan.

"Previously in 2019, similar fears prompted Chinese investors to move their onshore RMB (the Chinese yuan) out of the country, and speculators believe that part of that move involved Bitcoin given the growing demand over the same period," according to the report.

“We are currently seeing a similar price action as Bitcoin has seen a 6,2% rise since then, since one quotation by $ 8.700 to $ 9.250, exploding once again from its 2019-2020 daily trend line. "

It remains to be seen whether geopolitical tensions will intensify and lead to greater flows in bitcoin as a safe haven asset. The cryptocurrency grew by over 30% in the first half of January, when Iran and the United States ordered a series of airstrikes on their respective bases in Iraq, bringing geopolitical uncertainty to the financial markets.

Not just Trump

In addition to President Trump's China talk, bitcoin analysts are also keeping an eye on the May deadline for futures and options contracts listed on the Chicago Mercantile Exchange (CME).

Price volatility tends to rise around the expiration date of futures and options due to increased commercial activity. However, CME's contribution to total open interest on listed futures worldwide is only 11%, according to Skew data.

Likewise, the contribution of the Chicago exchange to open interest on total options is also quite low, so the deadline may not have a big influence on prices.