Business

Erik Gibbs

Grayscale labels crypto a safety net against the US-China trade war

If the trade war between the U.S. and China were to really get out of hand (and it just might), there is an alternative to fiat that should be seriously considered to weather the storm. Grayscale Investments, LLC points out that an escalating trade way is making cryptocurrency investments more secure and advantageous, and that fund managers should seriously consider adding digital assets to their portfolios to avoid any fiat crashes.

An article published (in pdf) by the asset management company last week describes crypto as “an exciting financial technology and investment opportunity,” adding that it can be a great safety net in the event of an economic crisis. The firm asserts, “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.”

Greyscale points to the current global debt as intrinsically dangerous, explaining, “A key component of liquidity risk is that it scales non-linearly with the amount of leverage in the financial system. This is particularly important within the context of our current economic environment, since global debt is at an all-time high of roughly $250 trillion and debt-to-GDP is over 300%. Despite muted volatility across global markets in recent years, the looming risk of a liquidity crisis is also high.”

That heightened risk comes as President Trump has threatened to increase the tariffs on China and might introduce another 10% in taxes on inbound products from the country into the U.S. Those tariffs would cover $300 billion in goods, and China reportedly retaliated by manipulating the price of the yuan on international markets.

A day after Trump made the tariff announcement, stock markets across the globe saw their worst day since 2019 began. It made investors extremely uneasy, prepared to retreat in case thing turned even uglier.

While the traditional markets tumbled, cryptocurrencies, for the most part, remained relatively stable and some even climbed. This in itself shows that there is increased confidence in digital currencies compared to fiat, a concept already shown to be consistent with most millennial investors, but also shows an increased sentiment to use crypto to forestall a major global economic crash.

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