Grayscale Argues BTC Hedges, With US-China Trade War as Case Study

Grayscale Investments, a digital assets investment firm that offers Bitcoin (BTC) trust shares, has published a case study on how BTC could be used as a hedge against financial instability. The firm used the case of trade tensions between the United States and China to make their point.

Grayscale Investments linked to its study in an official blog post on Aug. 8. According to Grayscale’s analysis, they believe that BTC’s store of value potential, its spending characteristics and its potential for growth with new technology poise the original cryptocurrency as an asset that is uniquely suited to strong performance during both normal economic cycles and liquidity crises.

As a result, Grayscale advises in the report that BTC is a beneficial asset to have in many long-term investment portfolios:

"With continued adoption, Bitcoin represents a transparent, immutable, and global form of liquidity that can provide both wealth preservation and growth opportunities. As a result, we believe it deserves a steady strategic position within many long-term investment portfolios.”

Like a number of other experts, Grayscale notes in the course of its study that BTC price is going up in the midst of the U.S.-China trade war, providing some data to support its theoretical arguments. The report notes:

“While the risk asset drawdown is still in its very early stages, Bitcoin is on the rise as these risks are just beginning to show up in other asset and currency prices. Since Trump first announced the tariff hike in May, Bitcoin has generated a cumulative return of 104.8% through August 7, versus an average of -0.5% for the twenty other asset classes, markets, and currencies below during the same period.”

The report also notes that the U.S. and China, as individual countries, have the largest economies in the world, composing approximately 40% of annual global economic output. 

A dissenting voice

Unlike Grayscale, BMO’s chief investment strategist recently went on record with CNN Business saying that he believes it’s too early to call BTC a safe haven. He argued:

“Bitcoin has been excessively volatile, especially the last couple of years. It’s the sexy kind of thing to go to now. I don’t base my investments on sex appeal. I base my investment on longer-term perspective. And I think the longer-term perspective, in terms of Bitcoin being that safe haven, I think it’s way too soon to call that.”