A few years ago, many in the crypto community described Bitcoin as a “safe haven” owned. Fewer calls here today.
A safe property maintains or increases value in times of economic stress. It can be a government bond, a currency like a US dollar, a commodity like gold, or even a blue-chip stock.
A prevalence of global tariff war set by the United States, as well as disturbing economic reports, has sent equity markets that have fallen, and Bitcoin also – which should not occur with a “risk off” asset.
Bitcoin suffered compared to gold. “While gold prices are up to 10%, Bitcoin has dropped -10% since January 1st,” mentioned Kobeissi’s letter on March 3. “Crypto is no longer viewed as a safe gaming.” (Bitcoin went down last week.)
But some observers in the market say it’s not really unexpected.
Bitcoin (white) and gold (yellow) price chart from December 1 to March 13. Source: Bitcoin counter flow
Is Bitcoin a safe shelter?
“I didn’t think of BTC as a ‘safe shelter,'” Paul Schatz, founder and president of the Heritage Capital, a financial financial counselor, told Cointelegraph. “The size of BTC motions is just great to be placed in the haven category although I believe investors can and should have a allocation in the asset class in general.”
“Bitcoin is still an instrument for me, not a safe shelter,” said Jochen Stanzl, market analyst of the CMC Markets (Germany), Cointelegraph said. “A safe investment in shelter like gold has an intrinsic value that will never be zero. Bitcoin can drop 80% in major corrections. I didn’t expect to be from gold.”
Crypto, including Bitcoin, “has never been a ‘safe haven play’ in my opinion,” Buvaneshwaran Venugopal, assistant professor of financial department at the University of Central Florida, told Cointelegraph.
But things are not always as clear as they first appear, especially when it comes to cryptocurrencies.
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One can argue that there are different types of safe havens: one for geopolitical events such as wars, pandemics, and economic retrieval, and another for strict financial events such as bank collapse or a weak dollar, for example.
Bitcoin’s understanding can change. Integrating its funds exchanged by the exchange released by the main ownership managers such as Blackrock and Fidelity in 2024 expanded its owner base, but it could also change the “narrative.”
It is more widely seen as a speculation or “risk to” assets like a technology stock.
“Bitcoin, and the crypto as a whole, have become quite associated with dangerous properties and they often move on safe properties, such as gold,” Adam Kobeissi, editor-in-chief of the Kobeissi letter, told Cointelegraph.
There is a lot of uncertainty on where the BTC is going, he continues, amid “more involvement in the institution and seizure,” and there is also a “narrative transfer from Bitcoin viewed as ‘digital gold’ in a more speculation -owner.”
One might think that accepting it through traditional financial giants such as Blackrock and Fidelity will make Bitcoin’s future safer, which will boost safe narrative – but that is not necessary, according to Venugopal:
“Large companies stacked with BTC do not mean that it has become safer. In fact, it means that the BTC is becoming the same as any other owner that investors in the institution tend to invest.”
It will be more subject to the usual trading and draw-down techniques used by institutional investors, Venugopal continues. “If any, the BTC now is more Related to risky market ownership. “
Dual nature of bitcoin
Some deny that bitcoin and other cryptocurrencies are still subject to large price swings, further driven recently by growing retail Crypto adoption, especially from the Memecoin Craze, “one of the biggest crypto-onboarding events in history,” Kobeissi said. But maybe that’s the wrong thing to focus on.
“Safe shelter has always been longer properties, which means short-term volatility is not a factor in that feature,” Noelle Acheson, author of The Crypto is Macro Now newsletter, told Cointelegraph.
The big question is whether the BTC can handle its value longer against fiat currencies, and it has been able to do that. “The numbers release its validity-in nearly four years of timeframe, the BTC has released the equities of gold and US,” Acheson said, and added:
“The BTC has always had two main narratives: it is a short-term risk, sensitive to the expectations of liquidity and general emotion. It is also a longer store of value. It can be the same, as we see.”
Another possibility is that Bitcoin can be a safe haven against some that happened but not to others.
“I see Bitcoin as a fence against Tradfi issues,” such as the fall that followed the collapse of the Silicon Valley Bank and Signature Bank two years ago, and “Treasury Treasury Dangers,” Geoff Kendrick, global head of digital assets research on standard chartered in cointelegraph. But for some geopolitical events, Bitcoin can still trade as a risk of risk, he said.
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Gold can serve as a fence against geopolitical issues, such as trade wars, while both Bitcoin and gold are fences against inflation. “So both are the best hedges in a portfolio,” Kendrick added.
Others, including Cathie Wood of Ark Investment, Sumang -according to Bitcoin acting as a safe shelter During the SVB and Signature Bank runs in March 2023. When the SVB collapsed on March 10, 2023, the price of Bitcoin was around $ 20,200, according to Coingecko. It stands close to $ 27,400 a week later, approximately 35% higher.
BTC price dropped on March 10 before going back to a week later. Source: Coingecko
Schhatz does not see Bitcoin as a fence against inflation. The events of 2022, when the FTX and other crypto companies collapsed and the crypto winter began, “injuries that are noticeable thesis.”
Maybe it’s a fence against the US dollar and Treasury Bond? “That’s possible, but those situations are a bit dark to think about,” Schatz added.
There is no time for excessive reaction
Kobeissi agrees that short-term fluctuations in asset classes are “often related to a long-term period of time.” Many of the foundations of Bitcoin remain positive despite the current drawdown: a pro-crypto US government, the announcement of a US bitcoin reserve, and a promotion of crypto adoption.
The big question for players in the market is: “What is the next major catalyst for running to continue?” Kobeissi told Cointelegraph. “This is why the markets are pulling and combined -Is: it’s a search for the next major catalyst.”
“Ever since MacRO’s investors began to see BTC seeing a high order, possession of the danger of liquidity in liquidity, it acts like one,” Acheson added. Moreover, “these are almost always short-term entrepreneurs who set the final price, and if they revolve around the hazards of risk, we will see the weakness of the BTC.”
Markets are in general. There is “The Specter of Renewed Inflation and an economic slowing down with weight loss” that also affects the price of Bitcoin. ACheson further mentioned:
“Because of this perspective, and the dual characteristics of BTC risk and long -term safe shelter, I was surprised that it was not falling apart.”
Venugopal, for its part, said Bitcoin has not been a short-term fence or safe shelter since 2017. As for the long-term argument that Bitcoin is digital gold due to 21 million BTC supply cap, which only works “if a large portion of investors together expects Bitcoin to rise in time,”
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