Bitcointhe Satoshi cryptocurrency officially created in January 2009, has always been considered a strategic asset, often a safe haven.
The trend until 2019
For ten years from its inception to 2019 inclusive, BTC has performed similarly to gold, the ultimate safe haven asset. How did it behave in relation to the markets? According to any safe haven asset worth its salt, BTC had no correlation with the markets, or rather the opposite.
When stocks went down, cryptocurrency went up and vice versa, this increased the idea that the currency was next to gold as a safe haven asset.
The trend after 2019
Since three years ago, something in the “behavior” of Bitcoin must have been stuck. In fact, since January 2020, the virtual currency has reversed its way of reacting, while its volatility has increased due to an increasing influx of investments in the asset by intermediaries and institutional investors (to date a third of the total, amounting to 5.5 million BTC). Total, Bitcoin will have more than 2.6 trillion dollars by the end of 2021. Another factor that has strongly contributed to this structural breakdown in recent years is the change that has occurred in the way people invest. More and more investors see cryptocurrencies as a financial instrument on which to speculate with easy short-term profitability and this means that the protectionist vocation of the value has been strongly affected. After 2019, Bitcoin’s behavior has been reversed: Every market crash or fluctuation is followed by a market crash. While gold is gaining momentum in this period of uncertainty, appreciating more and closer to its highs, BTC is fluctuating and losing ground, keeping a distance with the stock markets.
Bitcoin a safe haven? The case of Ukraine
The tensions in Ukraine have clearly shown that the quintessential virtual currency is not a safe havenor at least not in the way we conceive it. In fact, a store of value is a safe-haven asset that retains its value over time (and possibly appreciates) and always has a market, so it can be turned into liquidity when needed. Actually, both gold like BTC have these characteristics regardless of how BTC has performed against stocks in recent years.
Bitcoin is deflationary in nature and not controlled by any central power or bank and gold is the safe haven asset to which the value of coins was once linked, but the real distinction lies in time. If we think of virtual currency as an asset that retains its value and that will allow us to sell a part of it when the crisis is over and return to pre-crisis purchasing power, it can go well or badly. But if we think about it a long/very long term perspective, it is very likely (to put it mildly) that we will gain from its deflationary vocation and imminent expansion. Gold, however, allows us to sleep peacefully both for the period after the crisis, hopefully it will last as little as possible, and in the long term. What happened with the recent Russian invasion of Ukraine highlighted the high volatility of Bitcoin and his unwillingness to hold courage. The announcement of the invasion caused the currency to fall 10%but then recovered after the attack ended and closed at a substantial break-even point, but since mid-February its value has fallen from $44,000 to $33,000, later recovering to $41,500 at time of writing. In the same period, the gold almost peaked and now it is located in $1923 an ounce.
Bitcoin is not a safe haven asset, at least not in the short term.
