In times of turmoil, is Bitcoin really a safe-haven asset?

[Abiky]

I've seen how mainstream events like the coronavirus "COVID-19" and the downfall of the stock market, has negatively impacted Bitcoin's price across the crypto market. For a cryptocurrency that's been hailed as a safe-haven against traditional Fiat, it's been doing otherwise. Gold has been performing better than Bitcoin and other cryptocurrencies combined. It's odd to see something like this happening today since Bitcoin is a decentralized cryptocurrency. This should make it "immune" from real-world events whatsoever. Bitcoin's latest decline in price has shown us that the cryptocurrency is still linked to mainstream events. It's probably because Bitcoin is often traded on centralized exchanges than decentralized ones. As long as it stays that way, Bitcoin will never be able to become a "safe-haven" asset in times of turmoil. Or am I wrong?

What are your thoughts?

[1713533308]

1713533308

[The Sceptical Chymist]

It's odd to see something like this happening today since Bitcoin is a decentralized cryptocurrency. This should make it "immune" from real-world events whatsoever.

I disagree with that premise--bitcoin might technically be a currency, but in practice it's treated much more so as an investment, just like stocks and gold are.  People aren't buying bitcoin in order to spend it, and in times of crisis that would be foolhardy. 

Look at what's happening right now; this coronavirus panic is causing people to go to a very safe (for the short-term) asset--cash.  People are expecting this outbreak to cause quarantines and everything else that comes along with epidemics, so cash is useful for stocking up on food and supplies and consequently people are selling their investments.  Plus once a huge drop happens in the stock market (or the crypto market), it causes even more selling due to the fear of losing even more money. 

There's no way bitcoin is a safe-haven asset even in the best of times, and I say that based on its volatility alone.  And it's turning out to be even worse in a crisis.  I haven't done the math, but bitcoin has dropped something like $4k in the past month or two.  You tell me if that's an asset that people are going to flock to because they're scared.

[100bitcoin]

Depends on the 'type'. nCoV is one type, Venezuela is another.

[bithisach]

I've seen how mainstream events like the coronavirus "COVID-19" and the downfall of the stock market, has negatively impacted Bitcoin's price across the crypto market. For a cryptocurrency that's been hailed as a safe-haven against traditional Fiat, it's been doing otherwise. Gold has been performing better than Bitcoin and other cryptocurrencies combined. It's odd to see something like this happening today since Bitcoin is a decentralized cryptocurrency. This should make it "immune" from real-world events whatsoever. Bitcoin's latest decline in price has shown us that the cryptocurrency is still linked to mainstream events. It's probably because Bitcoin is often traded on centralized exchanges than decentralized ones. As long as it stays that way, Bitcoin will never be able to become a "safe-haven" asset in times of turmoil. Or am I wrong?

What are your thoughts?

While it's hard to deny that the current bitcoin price took a big hit, I don't think that the point is not for it to be just a safe haven, if we consider it like that then not only this event but many others could easily wipe out bitcoin from existance, again, under that premise. Now, when I talk to people about bitcoin they all usually refer to it as however many they have, or what's the position as in why they sold and whether they'll buy back, you see, when I need a certain currency I go to a trading house, go, get my euro or my pounds or whatever but if somebody ever asks whether I have some I'd probably go "sure I haven't changed the last few bucks I didn't spend", with bitcoin it's never like this, people see bitcoin as something they can store value on, some people sell because they need money in x amount of time and have a set sell price in their mind and I respect it, people buying euros or pounds don't worry too much about whether to sell and buy back, it's just not heard of.

[hatshepsut93]

Look at what's happening right now; this coronavirus panic is causing people to go to a very safe (for the short-term) asset--cash.  People are expecting this outbreak to cause quarantines and everything else that comes along with epidemics, so cash is useful for stocking up on food and supplies and consequently people are selling their investments.  Plus once a huge drop happens in the stock market (or the crypto market), it causes even more selling due to the fear of losing even more money. 

I sold zero coins because of the coronavirus panic, because I have enough fiat money to buy some supplies. The idea that people need to liquidate their coins in order to buy supplies assumes that people have zero fiat, which is really not the case, I don't think there's many people in the world who hold all their money in crypto. So, if someone needs cash, they can just withdraw if from the nearest ATM, no need to sell their coins.

[Chrystora123]

Source: https://www.newsbtc.com/2020/03/12/silver-gold-bitcoin-even-safe-haven-coronavirus/

many people seem to secure their assets to paper money.  This "Pandemic" really makes a big shock in almost all economic lines..  the vaccine must be found immediately to reduce the mass panic. Italy has closed their country, I just pray that the Vatican is free from the Covid-19 virus.

[squatter]

It's odd to see something like this happening today since Bitcoin is a decentralized cryptocurrency. This should make it "immune" from real-world events whatsoever.

Where does this belief come from? It's commonly held among Bitcoin investors, but it makes no sense to me. Why would any investment be immune to real world events?

Bitcoin investors are real people and real institutions. They are affected by market panics and economic downturns just like stock and commodity investors are. At best, we could hope that bitcoins hold value better than stocks do during an economic crash. Gold seems to fit that niche, but it certainly isn't "immune" to the world economy.

I don't like commodities as safe haven assets. In a crash, demand for, and consumption of commodities tends to fall. Perhaps their prices fall less than stocks in this situation, but stable fiat currencies seem like a much safer financial hedge.

[johnyj]

Give it some time to react. The sell volume is not high on exchanges, and all the fundamental aspects do not change, it is basically psychological effect, same as the sudden 30% jump when Chinese president Xi annonced China will focus on blockchain technology

Helicopter money will arrive, not sure if they will find a way into cronavirus affected labor forces, but definitely they will first enter capital markets to buy assets

But it is a sad reality about humanity: When in crisis, people still seeks fiat money, since that is backed by the ultimate credit of the government. They will never have such trust in cryptocurrency, which indicated that the PR work for cryptocurrency is far from effective

I think a very large advantage of fiat money is that people use it as a unit of accounting, like meter inch or lbs kg. once it become that standard unit of measuring value, its position as money becomes strengthened

How could make bitcoin a standard unit of something?

[gentlemand]

I've been pretty flabbergasted at the people flabbergasted by today's events. What on Earth did they think would happen? This isn't some bank going down or country making a balls up of itself. It's a global seizure. There's a bit of a kerfuffle in a corner of a market and then there's THIS.

The world is filled with people. Some of those people own Bitcoin. Those people will react in the same way as most other people. I think sometimes Bitcoin fans believe those 'holders' out there are steely buttocked missile men who won't let them down when it really counts. In reality they're quaking in their Y fronts while weeping in their gaming chair just like they are.

[JUPITYR]

BTC is definitely not showing well at the moment.  It seems that when things go bad, people flock to the old "reliables" like fiat and 401k's over crypto.  So if something has to go, it appears to be one's holdings of crypto.

Like others have said though, the selling volume really isn't there.  If you just bought recently at $8500, why would you sell today at $5k?  Makes no sense.  As always the weak hands get get flushed first.

A great time to buy though if you have the stomach to move your cash into any asset at the moment.  I for one don't think we've seen the worst of the mass panic yet.

[pakhitheboss]

What is happening is exactly opposite to what has been told. I always thought Bitcoin was immune from the outside world but things have changed now. If whales are manipulating the price they will never drag it to these levels. I fear the worst is yet to come. Bitcoin already below $5k in just 24 hours. I fear it will go below $3k.

[Bohr256]

It's odd to see something like this happening today since Bitcoin is a decentralized cryptocurrency. This should make it "immune" from real-world events whatsoever.

Where does this belief come from? It's commonly held among Bitcoin investors, but it makes no sense to me. Why would any investment be immune to real world events?

Bitcoin investors are real people and real institutions. They are affected by market panics and economic downturns just like stock and commodity investors are. At best, we could hope that bitcoins hold value better than stocks do during an economic crash. Gold seems to fit that niche, but it certainly isn't "immune" to the world economy.

I don't like commodities as safe haven assets. In a crash, demand for, and consumption of commodities tends to fall. Perhaps their prices fall less than stocks in this situation, but stable fiat currencies seem like a much safer financial hedge.

Tbh, its a lie that's parroted/spread around here for some absurd reason. I guess it makes them feel better about their btc investment. Good luck to them.

[gentlemand]

Tbh, its a lie that's parroted/spread around here for some absurd reason. I guess it makes them feel better about their btc investment. Good luck to them.

It's one of many theories that people cherished. I never understood why as it makes no sense at all.

It's not what you think about it that counts, it's what everyone else thinks and today they've at least eliminated that particular meme for a long time to come.

[senin]

What is happening is exactly opposite to what has been told. I always thought Bitcoin was immune from the outside world but things have changed now. If whales are manipulating the price they will never drag it to these levels. I fear the worst is yet to come. Bitcoin already below $5k in just 24 hours. I fear it will go below $3k.

So far, we can’t correctly assess the current events related to the fall in prices of all markets, and especially the cryptocurrency market. The reasons for the drop in the price of bitcoin may turn out to be completely different than we think now. However, it can be said that cryptocurrency will not be a safe haven in the event of global natural disasters. The current situation clearly shows this regardless of the reason for the current sharp fall in the cryptocurrency market.

[crwth]

I do think it's the people who HODL Bitcoin and they are cashing out completely. No matter the situation or the event, I do believe that some rich people have already sold most of their BTC causing the price to go down. The best thing about it is that we could now buy BTC at a lower price. I think that's the best silver-lining that could be offered. Don't you think so?

As long as people are involved, mainstream happenings are going to be connected, no matter the event it is.

[pooya87]

it appears that it is not as safe-haven-y as we thought but it has nothing to do with world events, coronavirus, ... it has one simple reason: the market is very small and susceptible to manipulation. and of course when the sell off starts the panic follows and that chain of events causes the big downfall thanks to the thin order books on exchanges where if you sell a small amount you change the price by a lot!

you mention gold, but gold has been dumping too. the difference is that gold market is packed and you have to dump 1000 times more compared to bitcoin to cause a big drop. if we adjust the drops based on the order book sizes you can see that bitcoin's drop is not that big on that scale.

[Janation]

Some experts even say that gold is not that reliable as a safe haven investment.

Some people already sold their Bitcoins so that they could have fiats to stock some essentials in their homes while this pandemic is still lurking. Safehaven or not, I would just reinvest now since it is the best time to do that. It might still fall but after that, we never know when will the price be this low, this might be our last chance.

[Ucy]

I think we all should be responsible for making Bitcoin and other cryptocurrencies safe haven.
If everything dies down today, I bet people will go back to their old ways. When the old way results to crashes , people will complain again,and it happens over and over again.
I wish people could stop being greedy/selfish and start doing things properly. The Right thing should be done absolutely! Decentralization, Transparency, immutablity, censorship resistant permissionless/trustless transactions, etc. We must try as much as possible to avoid things that will lead to problems in the future. Safe haven should be made of things that can survive worst disasters... I would seriously recommend things like foods(not "centralized food"), smale/medium scale farming implements, decentralized internet, first aid box, survival information, torch, more of natural things, mobile homes, mobile hospitals, mobile industries, inverters, etc. Crypto communities should produce and trade these things, even on decentralized exchanges. They should be continously traded like we normally trade cryptocoins. When disasters hit, lots of people in centralized world will have no option than to join our world and that will be good for price. I will definitely buy alots of cryptocoins that are specifically designed for such assets. And it would be fun to diversify into multiple assets

[davis196]

I've seen how mainstream events like the coronavirus "COVID-19" and the downfall of the stock market, has negatively impacted Bitcoin's price across the crypto market. For a cryptocurrency that's been hailed as a safe-haven against traditional Fiat, it's been doing otherwise. Gold has been performing better than Bitcoin and other cryptocurrencies combined. It's odd to see something like this happening today since Bitcoin is a decentralized cryptocurrency. This should make it "immune" from real-world events whatsoever. Bitcoin's latest decline in price has shown us that the cryptocurrency is still linked to mainstream events. It's probably because Bitcoin is often traded on centralized exchanges than decentralized ones. As long as it stays that way, Bitcoin will never be able to become a "safe-haven" asset in times of turmoil. Or am I wrong?

What are your thoughts?

It doesn't matter if bitcoin is being traded on centralized or decentralized exchange platforms.Do you think that,if bitcoin was 100% traded on decentralized exchanges,the price crash would have been avoided?
Bitcoin is a safe heaven for the people in a country,if there is a local crisis in that country.When it comes to global events,BTC can't be a safe heaven.I don't think that even gold can be considered a safe heaven,where there is a global "plaque".

[johnyj]

The only safe-haven at such kind of panic is short options, money might doubled many folds during this crash. But unfortunately, during most of the time, such options will just bring loss

I'm already sending fiat to exchanges and try to grab some coins, but seems the lowest point has passed, now its on the way back