Can BTC really be a safe haven?

[wwzsocki]

To answer the question: can BTC really be a safe haven? we'll have to find out what is the main problem that keeps it far away from being one?

In my opinion, this is VOLATILITY. So what forces BTC to make such large price movements?

It turns out that the biggest problem is the extreme leverage on cryptocurrency markets, which is offered by unregulated offshore exchanges.

BTC is highly concentrated and data show that almost 95% of BTC resources belong to a relatively small number of addresses. Such conditions give the market a 'kick' and increase greed.
At the same time, many traders who are using highly leveraged trading platforms have a very high-risk appetite and not always the skills needed to play with 100 or 200X leveraged trades.

BTC                ADDRESSES      %                 COINS                 USD              %COINS

https://bithub.pl/wiadomosci/bitcoin-na-lasce-algorytmow-dlaczego-btc-i-safe-haven-to-na-razie-zwykla-mrzonka/

Most exchanges that offer trading with very high leverage were not designed to handle not only the large-scale volumes in times of heavy market congestion but also the network traffic itself.
The problem of overloading exchange servers has become very common in the last two years. It is ironic that such things happen, of course, at times when markets tend to increase their trading volume drastically. This is a big problem, as we have seen lately, because it makes it difficult for traders to reduce their exposure, when such an event occurs, leaving them at the mercy of aggressive liquidation algorithms.

We have to remember that regulated exchanges only offer around 3 times leverage.

Crypto exchange insurance funds act both as an external picture of the exchange's success, but also as a measure of how aggressive and harmful their liquidation algorithms are for the traders.
This is because on almost every crypto exchange the insurance fund is capitalized from the liquidations of traders' positions.

100x leverage and higher 200X is attractive (at least at first glance) for a trader who wants to maximize profits with a minimum contribution of his own capital, but it causes this insane BTC price volatility, which prevents the profitable use of such high leverage. If the plug by Bitmex would not be pulled out on time a few weeks ago, BTC price would fell to 0$.
How could this happen? Isn't this still too early for such high leverage 100 or 200X in the crypto market?
https://hacked.com/bitcoins-price-recovery-stalls-as-bitmex-shuts-down-u-s-accounts/

In my opinion, only because of this Bitmex incident it would be wise to limit the widely available throughout the ecosystem high leverage to stop this absurd volatility and give a chance to BTC to be this safe haven finally!!!

Until the crypto exchanges attempt to solve this problem, bitcoin will not free itself from the framework of being a spinning toy towards a resource of true interest for traditional market players.

https://bithub.pl/wiadomosci/bitcoin-na-lasce-algorytmow-dlaczego-btc-i-safe-haven-to-na-razie-zwykla-mrzonka/

Source: https://bithub.pl/wiadomosci/bitcoin-na-lasce-algorytmow-dlaczego-btc-i-safe-haven-to-na-razie-zwykla-mrzonka/

[1714959317]

1714959317

[1714959317]

1714959317

[1714959317]

1714959317

[1714959317]

1714959317

[1714959317]

1714959317

[bitmover]

BTC is highly concentrated and data show that almost 95% of BTC resources belong to a relatively small number of addresses. Such conditions give the market a 'kick' and increase greed.

I don't fully agree. Ofc it is bad that there are addresses with high amount of coins, but most of those coins belongs to exchanges. Those coins do not belong to the same person, they are only custodial.

Like GOLD etfs for example, which one custodial, like GLD or IAU, hold billions and billions of USD in Gold.

To answer the question: can BTC really be a safe haven? we'll have to find out what is the main problem that keeps it far away from being one?

In my opinion, this is VOLATILITY.

Gold also has high volatility, not as high as btc ofc

But I think volatility is not the major problem. As long as its volatility is not correlated to stock market, it can be somehow a safe haven.

[forbesmining]

We can already say this, it is true. Bitcoin, gold, and stablecoins.

[wwzsocki]

...I think volatility is not the major problem. As long as its volatility is not correlated to stock market, it can be somehow a safe haven.

Then what is? What stops BTC from being a real safe haven?

Of course, there are many different factors that are not helping either: small market size, low liquidity, immature regulatory environment, but still, at the end of the day, we will finish at volatility because all mentioned factors only fuel it even more.

In my opinion, very high leverage on such small markets with low liquidity is like asking for disaster, which almost happened on the 12th of March, when Bitfinex has "server problems", which stopped BTC price from falling to 0. Whales, or large individual investors, in such a small market could and for sure are hunting for liquidity, causing all these sharp spikes and selloffs. Of course, such fast price fluctuation is responsible for many liquidations on leveraged trades, as we have witnessed, so many times during the last two years.
https://cryptoslate.com/advanced-botnet-attack-caused-1-2bn-in-longs-liquidation-on-bitmex/
https://bitcoinist.com/bitmex-liquidations-bitcoin-2020/

Of course, all these problems don't help BTC to be a safe haven, but still, I personally think that volatility caused by high leveraged trades on the small BTC market is the key here.

Cryptocurrency market capitalization is actually: $216 billion when global stock market capitalization in 2019 was $90 trillion and in this year only gained 17 Trillion in value, when crypto market lost during the last few years almost 600 Billion. https://www.cnbc.com/2019/12/24/global-stock-markets-gained-17-trillion-in-value-in-2019.html

[bitmover]

In my opinion, very high leverage on such small markets with low liquidity is like asking for disaster,
-snip-

Of course, all these problems don't help BTC to be a safe haven, but still, I personally think that volatility caused by high leveraged trades on the small BTC market is the key here.

Wait man  you are thinking the wrong way.
Btc has no liquidity problems. Volume in the last 24h was 43 billion dollars.
How can you say that it has low.liquidity? This makes absolutely no sense, as it is bigger than many stock exchanges around the world. It is bigger than Brazil stock exchange daily volume. Much bigger.

Small bitcoin exchanges doesn't affect the market , you can just ignore them, as they don't play a big role in determining btc price or volatility

Cryptocurrency market capitalization is actually: $216 billion when global stock market capitalization in 2019 was $90 trillion and in this year only gained 17 Trillion in value, when crypto market lost during the last few years almost 600 Billion. https://www.cnbc.com/2019/12/24/global-stock-markets-gained-17-trillion-in-value-in-2019.html

Bitcoin capitalization should not be compared to stock market like this imo.
London stock exchange was created in 1801. Sp500 is also very old and many others. There are thousands of companies there.

Companies that have pretty high profits. Bitcoin will never have profit, because it is not a company.
. Volume and market share of the largest companies of the world will always be higher than any safe haven

[sheenshane]

Considering Bitcoin as a safe haven for me is not possible because of the volatility. Golds and other assets consistently change by its market value the same as with bitcoins. Supply and demands have a big role in its value including access to this bitcoin may affect the trading and exchange cost of it. If anyone plans to make it as their safe haven it could be safe somehow but you must consider first the drastic or even the slightest change on its value. IMO

[gentlemand]

To answer the question: can BTC really be a safe haven? we'll have to find out what is the main problem that keeps it far away from being one?

It's down to size and saturation. Both are a fraction of their possible eventual dimensions. If it doesn't continue to grow and distribute wider it'll forever be the plaything of a few creeps on bucketshops.

The leverage thing won't go away. That's what attracts people to it. What'll temper it is more of them ballsing up and wiping themselves out and real world usage prising it out of their hands. To get to safe haven status will take many years with many bumps along the way.

[ChiBitCTy]

Some very good points here.  If we are looking to find a safe haven, a hedge instrument, then the very first thing you should be thinking of is gold.  It's been around for a very long time as a mode of currency/safe storage.  A LONG TIME.  So, bitcoin needs to continue to gain user adoption which will help stabilize price as well as increase it's power as a store of wealth.  This isn't to say it isn't already there somewhat right now though, because it is.  There's enough faith in it that many use it as a safe have they believe can grow ..not so much one that wont/cant fall.

[carter34]

For this time now it might not be so. I see bitcoin as just investment opportunity and I see many thinking that too. Bitcoin is still and cryptocurrency not being able to be predicted so it will not have that reliable trust that a save heaven should have.

[pixie85]

I think it can be a safe haven. It's not looking like that to buyers who got it a few months ago but to long term holders who got it for less than 3000 dollars 3 years ago it's very much a store of value.

I feel like Bitcoin punishes nervous speculators who think about it only in terms of fiat value. Those who buy and forget about it for a couple years are fine.

I also don't agree with that statement about 95% of coins being on a small number of addresses. It only means that bitfinex, binance and coinbase have a lot of users and people are stupid and trust those companies with their money.

[squatter]

It turns out that the biggest problem is the extreme leverage on cryptocurrency markets, which is offered by unregulated offshore exchanges.

How do you know? There is no direct evidence of that.

BTC is highly concentrated and data show that almost 95% of BTC resources belong to a relatively small number of addresses. Such conditions give the market a 'kick' and increase greed.

It's probably the concentrated and low circulating supply that is the real cause of volatility. Leveraged markets may only have a secondary effect, if any. It's also possible that the increased market depth from leveraged markets can, in many cases, reduce overall market volatility. That's the basis for this idea that the CME Bitcoin futures market is "taming" Bitcoin.

Wait man  you are thinking the wrong way.
Btc has no liquidity problems. Volume in the last 24h was 43 billion dollars.
How can you say that it has low.liquidity?

95% of reported Bitcoin trading volume is fake.

[d5000]

The analysis is interesting, and I think you have identified correctly one of the sources of Bitcoin's volatility. But I disagree about the solution you propose.

In my opinion, only because of this Bitmex incident it would be wise to limit the widely available throughout the ecosystem high leverage to stop this absurd volatility and give a chance to BTC to be this safe haven finally!!!

Unfortunately, there is nobody who can really "limit the leverage". Even if there was a worldwide recommendation by the FSB or a similar body, and exchanges had to abide them, nobody would prevent people to set up DeFi-style contracts in the same way.

I think the big problem is that Bitcoin even without the side effects of "modern" trading (like liquidation algorithms) tends to volatility. We've seen this as early as 2011, when there was no (or insignificant) leveraged trading. This is mainly caused by its almost purely speculative usage. Let's face it: most Bitcoin "investors" want to buy in cheap and later sell high - to fiat. This "hoard and sell" mentality is what creates the dramatic up- and downswings. And these swings are also the reason for the atractiveness for leveraged trading. If you see that Bitcoin in most years has at least a 50% change in price (it doesn't matter if it's upwards or downwards) then your tentation is big to "try your luck" and "ride the waves".

Only increased liquidity, which is most easily achieved by more offers of goods and services, will solve that problem in the long run.

Everybody can help, even without a business or a job where you can be paid in BTC - for example, sell your used goods for Bitcoin, and pay with BTC (re-buying the amount later if you want) always when it's possible without too much hassle. This is what finally will lead to more liquidity, order books will be much thicker and volatility can be effectively lowered.

[TitanGEL]

The term safe haven which means than asset that can retain its value or even increase its value during a crisis. I cannot say that bitcoin is a safe haven because recently we saw a major panic where the price drops so much and it is not a characteristics of a safe heaven. The most popular safe haven is Gold but its value is also drop when the pandemic start, the value of bitcoin is too volatile and for me it is not consider as a safe haven investments.

[davis196]

I get your point here,even though I don't agree 100%.
The crypto exchange platforms are the root of all evil.The Bitcoin price shouldn't depend on shady marketplaces,that are faking their trading volume and offering x100 leverage.Unfortunately,there's no alternative.We can't force all crypto exchange platforms to lower their leverage to x3.Only the governments can do that.Even if somehow all crypto trading platforms are convinced or forced to lower their leverage,some shady unregulated platforms would still offer x100 leverage and get all the "gambler" crypto traders.
Having high leverage is always more preferred by a trader.
Most of the Bitcoins are concentrated among a few crypto whales and early adopters,but we can't change that as well.

[tbct_mt2]

I would say that the suggestion of OP looks good because it might cause the less volatile price of bitcoin by lowering allowable leverages on crypto exchanges. Something like a universal allowable leverages.

Unfortunately, it is in theory. In reality, traders are always greed and be affected by emotions. Do you really think that with lower leverages, lost-traders will not see liquidations on their accounts or contracts. I do strongly believe such lost-traders will get liquidated repeatedly.

The problem starts from that. Newbies hear of many terrible anecdotes on leverage tradings and liquidations. They don't dig deeply to consider which leverages greed traders usually use and how easy each leverage will cause liquidation. Or even if they hear some story like "I trade with 2x leverage on crypto exchange, with bitcoin as collateral, and get liquidated many times. Now, I am broke". They will fear and never join crypto. Even 2x leverage can be so risky like that. No, I will never join that risky place. 

[asus09]

Bitcoin is digital currency have value and could be lower price at the some moment, many time bitcoin back lower price and give us reason how to manage bitcoin and try for investing with bitcoin and altcoin correctly, not trust all by invest your money without selling after bitcoin break to higher price and always get touch with good moment to buy and sell bitcoin.

[Bitcoinislife09]

To answer the question: can BTC really be a safe haven? we'll have to find out what is the main problem that keeps it far away from being one?

It's down to size and saturation. Both are a fraction of their possible eventual dimensions. If it doesn't continue to grow and distribute wider it'll forever be the plaything of a few creeps on bucketshops.

The leverage thing won't go away. That's what attracts people to it. What'll temper it is more of them ballsing up and wiping themselves out and real world usage prising it out of their hands. To get to safe haven status will take many years with many bumps along the way.

I think Bitcoin is a kind of safe haven. When we say safe haven this can be a comfort to many people. This will serve as a source of income to many people. Because the other safe havens seem to show negative correlations with the so-called risk assets such as stocks or oil or high-yield bonds, bitcoin shows no related articles to anything apart from cryptocurrencies.

[ampere]

I think when we say save haven; it is an indication that with bitcoin you can't always have losses, but reverse is the case.
Bitcoin is a very good token; vast and used for international transfers by its users, or for payment on webpages, but to me bitcoin is not a safe haven.

If you have 1 bitcoin today, it could be worth 7000$ today, then tomorrow it could be 4000$ or 20,000$; that is not an example of safe haven.
Stable coins should have the tag safe haven

[jhonjhon]

If you have 1 bitcoin today, it could be worth 7000$ today, then tomorrow it could be 4000$ or 20,000$; that is not an example of safe haven.
Stable coins should have the tag safe haven

That is a so-called volatility effect and this is also a reason why merchants and business owners decline Bitcoin as another mode of payment. It was the worries that bring in their mind and of course, the high risk of losing their money at any time. If this coin shows only less volatile (then to be a stable one), it will be sure that people will adopt the system easily but these market changes give away not to consider as a safe haven.  

[Twentyonepaylots]

I think when we say save haven; it is an indication that with bitcoin you can't always have losses, but reverse is the case.
Bitcoin is a very good token; vast and used for international transfers by its users, or for payment on webpages, but to me bitcoin is not a safe haven.

I think it is somehow a safe haven, but not that strong. With our imaginary price resistance range, we have seen the price of bitcoin not going beyond a certain range of price for the last 2 to 3 years and that is the very reason why users, websites and even merchants pursue to have bitcoin on their payment methods. I guess people calling it safe haven because they already rid the price of bitcoin in skyrocket.

If you have 1 bitcoin today, it could be worth 7000$ today, then tomorrow it could be 4000$ or 20,000$; that is not an example of safe haven.
Stable coins should have the tag safe haven

Volatility is what makes bitcoin not the safe haven because it does not behave like the tether or other stable coins. For now, what fits best with bitcoin is a form of investment especially the price per bitcoin is high.