Bitcoin bull Tom Lee told CNBC on Monday that cryptocurrency is a hedge against global risks, amid the U.S.-China trade conflict and currency war.
The founder and head of research at Fundstrat explained on “Fast Money ” that “bitcoin has done something very interesting this year. ”
“Last couple of years, it’s been really correlated to dollar.” he said. “Weak dollar has been good for bitcoins. … And it’s been really correlated to risk markets. This year, it’s steered away from the dollar because dollar’s been strong, bitcoin’s been up, which is a real breakage. It’s gone negative on correlation to the equity markets.”
Lee also added that crypto is now “positively correlated to gold” and it proved “itself this year to be a hedge against global risks.”
Gold surged as much as 2% on Monday, reaching its highest level in more than six years as U.S.-China trade conflict worsened. Investors are seeking safer assets like gold, cryptocurrency and bonds as the equity market is growing more volatile. Bitcoin also jumped nearly 8% on Monday.
In response to bitcoin rallying, Lee contributed “crypto winter” being over as one of the reasons why the currency is now bullish.
“I think that makes [crypto] authentic institutional source of diversification. I think that’s gonna help it propel to new highs.”
Earlier Monday, China, which has historically controlled its currency, allowed the yuan to fall to its lowest level in more than a decade. The onshore yuan breached above 7 per U.S. dollar and traded at 7.04. The Chinese currency has not broke over the 7 level against the dollar since the global financial crisis in 2008.
The yuan’s breakthrough came after President Donald Trump announced last week that the U.S. is putting 10% tariffs on another $300 billion worth of Chinese goods, effective September 1.
Following the move, U.S. stocks were trading sharply lower as the trade war between the U.S. and China intensified.