American stock markets experienced their worst trading day of the year on Monday after China escalated the ongoing trade war with the U.S. by devaluing the Yuan. As global economic uncertainty and political tensions rise, it’s important to keep an eye on the inverted yield curve in U.S. Treasury markets, which has accurately predicted U.S. recessions since 1960.
Local economic indicators in the U.S. appear to be fairly stable, with annual GDP increasing by 3.1% and the unemployment rate being at a 50-year-low of 3.7%. But volatility in the American bond markets indicates that investors might be anticipating near-term risks that could potentially affect businesses and individual consumers.
On Wednesday, financial markets throughout the world took a major hit after several central banks slashed interest rates.
According to former US Secretary of the Treasury for President Clinton, we might be at the most dangerous economic moment since the global financial crisis of 2008.
Norway’s national currency, the krone, dropped to its lowest level since the global financial crisis as trade tensions led to oil prices declining further. The krone fell to 10.097 per Euro on Wednesday, its lowest point since December 2008.
Bitcoin and Gold Investments Could Help Investors Survive During Economic Turmoil
Interestingly, the correlation between Bitcoin (BTC) and the gold bullion has nearly doubled in the last three months, Bloomberg reported. In the past year, BTC’s correlation with gold was of about 0.496, and reached 0.837 over the course of the past three months.
The Bitcoin price has exhibited unusual movements as at one point last year it became less volatile than major national currencies such as the Brazilian Real. However, financial analysts are increasingly recommending that investors allocate a certain percentage of their portfolio to Bitcoin. This, as the world’s leading decentralized digital currency could effectively serve as a hedge against the fiat-based financial system.
While the residents of nations with fairly stable currencies such as the USD or euro might not feel the need to use Bitcoin at the moment, the citizens of Venezuela have begun to increasingly adopt the flagship cryptocurrency. The South American nation’s economy has collapsed as the Bolivar has become practically useless due to hyperinflation.
Bitcoin Trading Volume Hits Record High in Venezuela
On Wednesday, President Trump issued an executive order that imposed a freeze on all of Venezuela’s assets in the United States, Reuters reported. Shortly after the announcement, BTC trading volumes on peer-to-peer (P2P) crypto exchange LocalBitcoins surged to an all-time high of more than 65,000 million VES (during the course of the past few days).
Bitcoin was also trading at a $600 premium on LocalBitcoins in Venezuela.
During the past few years, millions of Venezuelans have left the country, which has resulted in a major emigration crisis in South America. The residents of the nation have also been trying to protect their wealth by using Bitcoin as a store of value. This, as the Bolivar’s inflation rate is expected to reach 10,000,000% by the end of 2019, the International Monetary Fund (IMF) estimated.