Bitcoin: A Hedge for Trump’s China Trade War?

May 20, 2019, 10:00 PM UTC

Global uncertainty is good for Bitcoin investors, it seems.

As trade talks between the United States and China broke down earlier this month, the price of Bitcoin soared higher than it has all year. Market watchers have speculated that the cryptocurrency, commonly referred to as “digital gold,” benefited from investors’ jitters in the equities and foreign exchange markets, which sent stocks and China’s currency downward.

Barry Silbert, CEO and founder of Digital Currency Group, a cryptocurrency firm, made note of this trend on the latest episode of Fortune’s Balancing The Ledger show. “It’s certainly interesting that the [Bitcoin] price started its acceleration, moving up and to the right, when the trade discussions broke down,” Silbert said.

Bitcoin boosters such as Silbert have long argued that the virtual coin could afford protection in hairy economic situations. “I think [Bitcoin is] serving as a bit of a non-correlated asset,” Silbert said, meaning an asset that is insulated from the vagaries of the traditional financial system, as “people always expected Bitcoin would be.”

Silbert says to look no further than Bitcoin’s durable, if nascent, track record in times of crisis. “If you look at over the past five years—when ‘Brexit,’ happened, Bitcoin went up. When ‘Grexit’ happened, Bitcoin went up,” he said.

Betting on Bitcoin, an asset often knocked for its volatility, may then offer a counter-intuitive haven for investors spooked by trade disputes and other macroeconomic matters. “Flight to safety of bitcoin,” Silbert posted to Twitter amid the market undulations this month (a comment intended as “a bit tongue in cheek,” he told Fortune).

Nevertheless, there is reason to believe that Bitcoin might perform better than other common investing hedges. Gold, for instance, has been hoarded by central banks in recent years, Silbert says, an uncomfortable fact for people who claim the precious metal offers asylum from governments’ fitful fiscal engineering.

When the going gets tough, central banks will be compelled to sell off their treasuries and gold hoards first, Silbert reasons. “It doesn’t mean necessarily that the money will move into Bitcoin, but it just means that you don’t have the forced pressure of people selling the Bitcoin” if global economies go south.

The thesis matches a national, multimillion-dollar advertising campaign by Grayscale Investments, an arm of Silbert’s Digital Currency Group, that debuted this month. The television commercials urge consumers to “drop gold” in favor of Bitcoin.

Of course, even when buying Bitcoin in anticipation of international impasses and monetary implosions, it’s far from a sure-fire bet. As Silbert conceded: “Ultimately, given the volatility that exists in Bitcoin, I think there are plenty of examples you can find where [the price] went down when those macro events happened as well.”

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