A well-known economist and Bitcoin critic, Peter Schiff commented on Bitcoin going above $9,000 today. Schiff was asked on Twitter about his viewpoint on Bitcoin rising while Gold has been stagnant at $1,700.
As usual, Schiff replied by saying Bitcoin and Gold have nothing in common and that the only reason Bitcoin is going up is because of speculations, Schiff also called Bitcoin a simple risk asset and stated that many risk assets are going up today.
Bitcoin has been outperforming most assets yesterday and today and briefly climbed above $9,000 but quickly dropped down to $8,800 in a violent sell-off as selling pressure keeps mounting.
Is Bitcoin a Risk Asset or Safe Haven?
If you are into Bitcoin, you have probably heard the term risk asset or safe haven a few times. Analysts love to use both terms but is Bitcoin really any of those things? Bitcoin has been called ‘digital gold’ and a safe haven for a few years now, the idea behind a safe haven is that it will maintain its value even in times of economic uncertainty.
This narrative about Bitcoin was struck hard when the WHO declared the Coronavirus as a pandemic and the entire market crashed. The 60% crash experienced by Bitcoin was a big hit on its save haven narrative, however, Bitcoin has managed to recover now and it’s actually trading at prices higher than before the crash while stocks and Gold have remained stagnant.
A risk asset is basically an asset that has a lot of risk behind it with a lot of volatility. Clearly, Bitcoin does have a lot of volatility and uncertainty so how can Bitcoin be a safe haven and risk asset at the same time? It seems that Bitcoin might be able to be both as the digital asset does tend to always recuperate.
Bitcoin seems to be a new form of safe haven that only works in the long-term. If you have been holding Bitcoin since 2015, your investment would be up by more than 4,000%.