Bitcoin has been trading somewhat sideways for the past 10 days and it’s locked within the $10905 to $9880 range. Today’s small drop came as a surprise as most people expected Bitcoin to have a bullish reaction to the drone attack on Saudi Arabian oil facility this weekend.
The overall crude oil prices surged today and are trading 10% higher than on Friday. Other haven assets did react positively, for instance, Gold settled at the highest price in over a week.
Bitcoin investors are certainly concerned, especially when Bitcoin is a 24/7 market and hasn’t been able to reflect the Saudi story which was the single largest outage at 5.7m b/d of oil.
Bitcoin started out as a form of currency and payment but the recent narrative for Bitcoin has been about being the new Gold and a Safe Haven. This idea, however, has been also quite hard to defend considering the volatility of Bitcoin but institutional investors seem to be more and more appealing as trade tensions between the US and China keep escalating.
There are some points in favor of Bitcoin, though. For instance, having an uncorrelated and decentralized asset on your portfolio is always a great idea. Bitcoin works mainly on speculation and supply and demand which means that in case of a global market catastrophe, Bitcoin could certainly act as a Safe Haven.
“Cryptocurrencies are now almost universally regarded as the future of money – but what has become clear…is that they are increasingly regarded a safe haven in the present’’ said Nigel Green, Chief executive and founder of deVere Group, an independent international financial consultancy.
In fact, some countries that have currency problems are seeing Bitcoin trade at a premium on some exchanges, in countries like Venezuela, Bitcoin trading has picked up significantly.
It’s also worth noting that Gold and other Safe Havens do not necessarily react positively to bad news about the stock market. Bitcoin did act more or less as a Safe Haven when China’s Yuan was destroyed by the trade war with the U.S.