Bitcoin, the safe-haven currency?
Stocks have gone down, and banks have made sure to say that you must sell your Bitcoin and run for the hills or lose it all. It seems as the world is going into a crisis before our eyes. This past year up until now, we have seen several social uprisings in different countries, health concerns regarding the recently declared pandemic Covid-19, and the crashing of major stocks worldwide.
Many have pointed out that Bitcoin will be a safe haven from the financial crisis. How can this be true? The cryptocurrency market has also been affected by our current economic state, and prices are bearish. I believe most of the crypto adopters aren’t scared of these recent events and speculations of a deep financial crisis. Precautions are taken, but overall I think people are opting to buy more crypto while prices are down. Unlike traditional stock markets, the crypto community is here to stay and is strong on their beliefs of this being the future of money.
Can Bitcoin be a safe haven asset from a crisis? It most definitely can be; if it reaches that point. Let's remember that we have examples of countries that have relied on digital assets as an option to fiat crisis, such as Venezuela. Venezuela is a country that has been in a constant financial crisis, and citizens have reached out to different options such as crypto. The government even created its own digital currency Petro.
“Studies suggest that people are increasingly looking to bitcoin as a viable alternative to their own beleaguered currencies during times of crisis. As the Greek crisis unfolded, bitcoin exchanges reported a healthy bump in volume as people traded the cryptocurrency around the world. The lion's share of the increase came from customers in Greece.”
“The price of bitcoin also rose significantly as the Greece crisis deepened, lending further credence to the idea of bitcoin as a "panic" currency.”
If a financial crisis reaches the point where banks retain your money or where its value has deflated so much that it causes a problem, what will be your option? I guess this is where we can think of crypto being a safe haven. Being able to have access to a digital currency that works on a decentralized network where you don’t have to rely on government regulations on what you can or can't do with your money; seems like a good option.
By: Carolina Pérez