At Token2049, experts discuss the U.S. and China trade war outlook and how Bitcoin could become the next “arms race” for countries looking to maintain economic power.
On April 30, founder and CEO of Ex Uno Plures, Zoltan Pozsar commented on the trade war between China and the U.S. as both countries levy tariffs against the other in an attempt to tip the global trade system in their favor.
According to Pozsar in a closed door panel, China is currently in a precarious position; similar to that of the U.S. during the Great Depression. The economist explained how China’s economy is heavily dependent on revenue generated from exports in order to service its large debt which keeps piling up.
Trump’s tariffs hit China where its most vulnerable as it restricts its exports. Pozsar believes the tariffs will hurt China more than Western consumers because when faced with rising prices, consumers will just end up buying fewer goods to save money.
On the other hand, China’s options for dealing with this economic pressure, such as stimulating domestic consumption, clash with the Communist Party’s ideological framework, making the crisis difficult to manage.
Nevertheless, Pozsar concluded that both countries have been switching strategies. On one hand, he observed that the U.S. has begun to act more like China in the way it has been shifting towards using stimulus to fund industrial projects, while China has been gradually shifting towards a more Western model of testing direct-to-consumer monetary easing.
Meanwhile, he stated Europe has been mismanaging its strategy by spending more funds on keeping the central banks running. Altogether, this realignment of global trade strategies makes the case for crypto all the more compelling, especially Bitcoin (BTC).
The strategic Bitcoin gap
With the U.S. already in possession of around 1% of the world’s Bitcoin supply, founder and managing partner at Pantera Capital, Dan Morehead, said the rational step would be for the U.S. to keep growing its Bitcoin reserves, much like how it has long held gold as a reserve asset.
After the U.S. landmark move of establishing a national BTC reserve, Morehead predicts the emergence of a strategic Bitcoin gap, where other countries will compete to build their own national Bitcoin reserve. This, he believes, will be especially true for nations aligned with or threatened by the U.S.-led financial system.
Even countries like China, that remain anti-crypto despite holding $18 trillion worth of seized BTC, could be swayed into adopting a Bitcoin reserve if it meant getting the upper hand over the U.S.
Earlier this month, VanEck’s recent report revealed that China and Russia have been settling select energy transactions using Bitcoin in an effort to shift away from the U.S. dollar-dominated financial system.
