While Bitcoin does not establish any safe-haven criteria, it does reflect some strong potential for decent gains. This is indeed a reflection of the trade tensions between the US and China trade tensions.
The US stocks recently went down by 3%. The safe-haven assets like the Japanese Yen, Gold and government bonds were expected to hold or gain during turbulent market trends; however, they rallied as investors were concerned over the trade war and the consequent impact on the global economy.
Several crypto enthusiasts opined that this, in turn, propelled the Bitcoin to achieve its status as a haven. The argument is that Bitcoin is immune to price manipulation due to its decentralized nature, whether of geopolitical tensions or trade wars.
Despite several attempts, there has been no correlation between the price rally of Bitcoin and the price of the stocks. This is because Bitcoin is mined by miners who compete to solve computer puzzles, and the government does not issue it. The supply of Bitcoin is capped by 21%, and therefore it is scarce, and it proposes innate value comparable to rare metals per those enthusiasts who are more concerned about scarcity and its impact on the value of the token.
The US president Donald Trump is all set to slap Chinese imports with massive tariffs, and this led the stocks to tumble down and to lead to the rise of the price of Bitcoin.
Ever since Trump’s threat has been out in the air, BTC has gone up to 23% when compared to the 4.6% slump in the S&P index. In just a week after the tariff hikes were declared the price of the Bitcoin went up by 41% versus a 3.8% decline in the US stocks.
During times of market uncertainty, investors tend to move in a small percentage of their investment to Bitcoin.
Marcus Swanepoel, CEO of Luno, a London-based cryptocurrency platform, stated, “If you’re wrong, you’re not losing lots of money, but if you’re right we are talking outsized returns.” He further opined that Bitcoin has begun to move concerning market volatility, just like Gold does.
However, it has been seen time and again that any correlation of Bitcoin with traditional safe havens is just a short-term trend. While Bitcoin has the potential to serve as a haven, there have been times when hacks and heists have confused the pricing.
Swanepoel concluded, stating, “If exchanges solve the issue of cybersecurity, it could in the longer-term be seen as a safe haven.”