Last Friday President Donald J Trump said there is a ‘good likelihood’ he will close border this week if Mexico does not stop immigrants from reaching US.
Apart from the obvious issues like millions of legal border crossings disruption, a complete shutdown would disturb billions of dollars in trade, about $137bn of which is in food imports.
More than 75% of avocados in the United States come from Mexico and the US consumes more than 75% of Mexican avocados. So tensions are high even on just the threat that this supply line might soon be closed and grocers are clearly in accumulation mode.
Source: Bloomberg
The chart above clearly shows what can happen in a low liquid environment.
Whatever happens in politics, the avocados situation won’t last forever, it’s just a temporary price spike due to external conditions. Eventually, the market will correct itself, either by political means or agriculture.
In bitcoin, however, there will only ever be 21 million BTC created. Low liquidity can create price spikes but permanent scarcity is a way to ensure that higher prices are sustained over time.
Bitcoin price behavior continues to amaze analysts, as it surged 15%, broke through the $5,000 barrier for the first time since last November, and then settled in above the $4,800 mark to contemplate its next move.