President Donald Trump stunned the world Saturday with the announcement of a ceasefire in the U.S. China trade war. After a high stakes face-to-face meeting with Chinese President Xi Jinping, Trump told reporters that he would be holding off on the threat of more tariffs on $300 billion in Chinese imports. Though the bitcoin price has risen dramatically with global macro uncertainty looming heavy over the geopolitical backdrop, the price slipped approximately 3% on Saturday to just below $12,000.
Tom Lee Says Bitcoin Is Doing OK
Fundstrat Co-Founder Thomas Lee tweeted that “bitcoin seems to be OK with developments” and that the “easing of tensions with US and China and even the surprise of easing restrictions on Huawei does not seem to be hurting bitcoin.”
The bitcoin price continued to chart along a textbook 38% Fibonacci retracement following the trade war update Saturday. The retracement made up around $1,100 of Wednesday and Thursday’s $3115 pullback from bitcoin’s ecstatic June accumulation.
So far on Saturday, bitcoin is holding steady at that key support level, with $12,000 per bitcoin looking like it may shape up to be a psychological level of resistance.
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The bitcoin price fell 3% after the surprise announcement of a tariff ceasefire in the U.S. China trade war. | Chart: Trading View
Trump Gives Greenlight on Huawei
In addition to holding off on more tariffs, Donald Trump made a surprising announcement about Huawei in Osaka. The president said the U.S. will be lifting the embargo on U.S. suppliers to sell their parts to Chinese consumer electronics giant Huawei Technologies.
“U.S. companies can sell their equipment to Huawei. We’re talking about equipment where there’s no great national security problem with it.”
Investors will have to wait until Monday to see how equities markets react. The news will likely be a major boon to the Dow, S&P, and other stock market benchmarks. The abrupt cool down in trade war tensions was surprising to many, although investors didn’t expect the U.S.-China trade war to abruptly heat up either. Traders placed their bets this week against any sudden moves by the Trump administration that would hurt the stock market’s record-setting June performance.
Digital Currency Group’s Barry Silbert tweeted:
“How’s gold responding to the news? Oh wait, we’ll need to wait until Monday to find out.”
Bitcoin Price Reflects Macro Worries
The most dominant cryptocurrency on the planet is widely understood and used by investors as a macro hedge like gold. The trade war may have chilled some after the G20 summit, but that doesn’t mean it’s over yet. The global outlook still remains uncertain in the looming shadow of war with Iran. The U.S. Secretary of State, Director of the CIA, and National Security Advisor are aggressively pushing for this war. The Federal Reserve appears all but certain to cut rates and stretch the U.S. dollar even thinner. The price of gold and the 10-year bond yield continue to signal recession ahead.