Bitcoin is Still a Safe Haven Asset, Despite Collapsing in Line with the Stock Market

  • Bitcoin functions as a hedge against “inflation, geopolitical strife, and central banks” instead of a pandemic
  • The market is experiencing a “very strong risk-off environment,” where gold prices fell as well

The price of bitcoin started declining along with the S&P 500 towards the second half of February amidst the spreading coronavirus (Covid-19). Between Feb. 20 to 28, the S&P 500 fell 14% while the price of BTC slid 13%.

The drop in the crypto asset’s price in line with the S&P 500 led people to question the narrative that Bitcoin could function as a safe haven like gold.

“Safe from what?”

Analyst Mati Greenspan argues this means, Bitcoin functions as a hedge against “inflation, geopolitical strife, and central banks” instead of falling corporate profits or pandemics.

Bloomberg’s Joe Weisenthal also shared a similar opinion saying that Bitcoin is still a safe haven asset but you can’t expect it to hold up well in the current financial market panic.

“The most important thing is that to talk about something being a “safe haven” you have to ask “safe from what?” Different assets — gold, land, diamonds, ammo, canned sardines, Treasuries, dollar bills, Bitcoin — can each offer safety, but from different risks,” said Weisenthal. He added:

“Treasuries won't help you in a natural disaster or a war. Canned tuna won't help you in a liquidity crisis. Gold bricks won't help you if you have to escape a country on foot (too heavy). For each safe haven, there is its time.”

This theory according to SFOX aligns with the data recorded in January this year when the BTC price rose amidst US-Iran tensions.

A “very strong risk-off environment”

If we take a look at the traditional safe-haven asset gold, its prices fell about 5% during this period as well. This has been simply the market experiencing a “very strong risk-off environment,” where traders are selling off even those assets that are typically seen as relatively safe.

The market movements are constrained to just a couple of weeks and to assess the extent bitcoin is growing into a safe haven asset, we need to take a longer-term perspective.

“What is a safe haven anyway? Gold is down 2% since this whole market rout started yet nobody questions its status. In the initial volatility of such an event ppl tend to sell everything indiscriminately. Let's see what happens when the panic subsides,” said former eToro analyst Greenspan.

Leading to the digital revolution

Today, while bitcoin is up 4.19%, climbing to $8,158, just as stocks are trying to rebound on its worst day since the 2008 financial crisis, gold prices are on a corrective pullback after hitting a 7-year high above $1,700 on Monday. In 2008 as well, the price of the yellow metal fell nearly 25% following stocks as investors try to get hold of cash.

With Saudi Arabia increasing the output to a record 12.3 million barrels a day in April and uncertainty engendered by the virus that has sickened at least 115,000 and claimed over 4,000 lives worldwide, gold bulls remain fairly optimistic.

The same has been happening with bitcoin as Raoul Paul Founder and CEO Real Vision Group said, “It feels like any hedge fund that was long bitcoin is having to liquidate. VAR takes no prisoners.”

VAR is the measure of risk in a portfolio connected to volatility and as the volume of all assets goes up, investors have to reduce risk.

“It's a buying opportunity but no need to rush in yet. The current event in markets will accelerate the need for the new financial system over time. We know where this is leading to – the digital revolution. Hodl on to your hats…!” Paul said.

Bitcoin (BTC) Live Price

1 BTC/USD =$9,439.1776 change ~ 1.87%

Coin Market Cap

$173.94 Billion

24 Hour Volume

$4.99 Billion

24 Hour VWAP

$9.36 K

24 Hour Change

$176.7177

Get Free Email Updates!

*Action* Enter Best Email to Get Trending Crypto News & Bitcoin Market Updates

I will never give away, trade or sell your email address. You can unsubscribe at any time.

AnTy
AnTy
AnTy has been involved in the crypto space full-time for over two years now. Before her blockchain beginnings, she worked with the NGO, Doctor Without Borders as a fundraiser and since then exploring, reading, and creating for different industry segments.

[Alert] Use the author's self-conducted information at your own risk, do you own research, never invest more than you are willing to lose.

[Disclosure] The published news and content on BitcoinExchangeGuide should never be used or taken as financial investment advice. Understand trading cryptocurrencies is a very high-risk activity which can result in significant losses. Editorial Policy \\ Investment Disclaimer

LEAVE A REPLY

Please enter your comment!
Please enter your name here

3,473FansLike
2,795FollowersFollow
4,198FollowersFollow

Live Bitcoin Price & Latest BTC Charts

Today's Latest Crypto News

Is it that Time Again? Yes it is! The Market is giving All the Signs that it is an Alt Season

Everything is popping! Is anyone getting 2017 vibes? https://twitter.com/CryptoMichNL/status/1280821951011999745 Tis' the time when gains floweth over. Today, even bitcoin jumped to $9,480 with $1.2 billion in ‘real’ trading...

South Korean Govt. Permits Blockchain-Based Free Trade Zone for Industrial Hemp After Amending 70 Year Old Narcotics Law

The South Korean government has granted a permit to Andong city in Gyeongbuk province of South Korea to run a free trade zone for...

Kraken and Binance Form New Partnerships to Offer More Fiat Funding Options

Amidst the flying altcoins and stuck Bitcoin, cryptocurrency exchanges continue to add new options to allow users to buy and sell digital assets. Kraken has...

India’s Tech Giant, Tata Consultancy Services (TCS), to Launch ‘Quartz' Crypto Trading Solution For Institutions

Tata Consultancy Services (TCS), a subsidiary of India’s largest tech firm, Tata, announced the launch of a crypto solution enabling traditional financial institutions to...

Nexo Collabs With Chainlink; Using Its Decentralized Oracle Network for Crypto Lending Transparency

Nexo’s, leading crypto lender will integrate Chainlink’s extensive Oracle Network to its platform in a bid to decentralize and secure its infrastructure as...

BitcoinExchangeGuide is a hyper-active daily crypto news portal with care in cultivating the cryptocurrency culture with community contributors who help rewrite the bold future of blockchain finance. Subscribe on Google News, see the mission, authors, editorial links policy, investment disclaimer, privacy policy. Got News? Contact us, we are human too. Note: nothing here is financial advice, do your own research thoroughly.

Start Using Crypto Today