Bitcoin (BTC) is still a safe haven asset despite its massive price drop over the past week. At least, according to the digital assets research firm, Bloqport. Bitcoin’s inability to retain value as other assets declined has raised questions about claims that it is a safe haven asset.
Bitcoin price drop raises concern
The drastic nature and velocity of last week’s price drop had even some leading crypto champions doubting bitcoin’s resilience in future market crashes and economic downturns.
The experts expressed concerns that there was a strong correlation between bitcoin and other risk-on assets price movements last week. This could signal to investors that the cryptocurrency could not be relied upon to withstand the market pressures in the future, which is a key indicator for safe-haven assets.
However, Bloqport may have put these fears to rest through a recent tweet in which they likened bitcoin’s recent behavior to Gold’s performance during the 2008 financial crisis.
Bloqport observed that Gold too had a massive 30% crash during the last global economic crisis. The asset plunged from about $1,000 to $700 indicating that it was not a safe haven asset during the crisis.
Watch what happens next
Bloqport added another twist to the raging debate about Bitcoin’s safe-haven asset status stating that what happens next is of greater significance.
According to the crypto analyst, investors buy safe-haven assets after markets bottom. Case in point, Gold price rise began in 2009 as the economic downturn was tapering off. As such, they expect bitcoin’s price to soar when the current coronavirus-driven economic crisis wears off.
These observations will provide some much-needed relief to the crypto community and long-term bitcoin investors.
The huge price movements on the Gold chart also show that volatility is not unique to bitcoin and cryptocurrencies. Critics have repeatedly cited Bitcoin’s wild price movements as the reason for excluding the cryptocurrency in their portfolio. Despite continually defying odds and staking its claim as a viable asset, this narrative has persisted. Now, this narrative feature prominently in claims that discount bitcoin safe-haven status.
Current economic crisis huge test for Bitcoin
Bitcoin continues to prove many people wrong and keeps manifesting its capabilities in the midst of never-ending controversy. The digital asset has passed multiple tests in the past and silenced its critics repeatedly.
Now, bitcoin faces its biggest test yet. That of proving it is truly a safe haven asset.
The current economic crisis is a defining moment that poses tough questions for the digital asset. If it responds properly and retains its value, it will surely affirm its status as a safe-haven asset.
Going by its recent behavior mirroring that of Gold in a past crisis, I would bet that bitcoin’s resilience will prove why it is considered as the Digital Gold.