Market turmoil triggers safe haven flows into sovereign bonds and now a new asset of trust: Bitcoin. Over the past 72 hours investors piled into safer securities with the US Treasury market seeing substantial flows, and with this new retaliatory strike by China global markets are in a mini-panic. Risk assets around the globe slumped when US president Donald Trump suggested that he would impose a 10% tariff on goods being imported into the US that were not subject to tariffs until now.
China quickly fired back on Monday, allowing the yuan to weaken to its weakest level in 10 years and the Communist Party asked state-owned companies to stop buying US farm products, adding pain to US farmers, who are big supporters of President Trump. While cryptocurrencies are now used globally, they are not subject to influence by governments and as such, they are at least to some extent, recently considered safe assets by some investors.
In May of 2019, when Trump threatened to ramp up the trade war, Bitcoin and other cryptocurrencies rallied. All the chaos in the world is forcing interest in safe assets and now digital currencies are considered somewhat safe in some circles.