Can BTC really be a safe haven?

[ololajulo]

Lately, we dont see articles and arguments that compare Bitcoin, ethereum and every other coin. We are back with Gold and Bitcoin comparison which was more around before the last ICOs and altcoin seasons. it is now getting to a cycle on the trend of asset comparison. BTC has more advantage as a digital asset and portability, the volatility's disadvantages is just the scare, 95% dump could be heart breaking for hodlers that dont take profit or buy at bull market .

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[bitmover]

95% of reported Bitcoin trading volume is fake.

Bitcoin has no liquidity problems.  Even if 95% is fake, 1 billion usd volume is pretty high.

Do you need to sell more than 1billion usd in bitcoin per day? Ffs
Saying that bitcoin cant be a safe haven because it lacks liquidity is just false.

[wwzsocki]

...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...

Fully agree with you that Gold is the best and so far longest used safe haven, for sure we should keep close attention to it, but also we have to remember that the time is going forward very fast, especially when it comes to technology and finances, everything is evolving, so fast as never before.

This can and for sure will have an impact on everything, so maybe in 10 years gold will be not used as safe haven anymore, maybe BTC will, despite everything. Why?

Because gold is not easy to store, move, pay with, secure, send, buy, sell, etc. Lately, I have heard a discussion between two investors and they agreed that gold is a good investment right now and they would like to have it in their portfolio, but the problem is, they don't want to trust to anyone, only really own this brick of gold and to have it safe in their own possession. If you want to buy more gold there is no easy way to check the gold you are buying. There is no easy way to check the hall brick from inside, outside for the purity correctly. It makes the gold in our times less and less usable.

Of course, BTC is the opposite of gold because it is easy to store, send, pay with, and mainly because of this many people started to literally call it safe haven, but they are forgetting about many problems... like volatility.

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.

Of course, I am speculating, but based on strong facts.

https://hacked.com/bitcoins-price-recovery-stalls-as-bitmex-shuts-down-u-s-accounts/
https://cryptoslate.com/advanced-botnet-attack-caused-1-2bn-in-longs-liquidation-on-bitmex/

[aakashsangwan]

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/

Everything you said is fine but most people here are either in bitcoin for making a profit rather than waiting for long time for its price to skyrocket and the margin trading is the best way to earn or loose a large amount very quickly and I know it very well as I have experienced both the outcomes.
Also bitcoin is more of an investment system rather than a payment system and now people should be able to see the Price movement in order to invest in an accomodity, and that price movement is provided by the margin trading to be honest.

[Yamifoud]

We know how vulnerable we are into hacking events, thousand and millions of bitcoins has been a hack that coz alarming for big investors to take the risk. We can't deny that we are not really at 100% or even near to that and it is added by its volatility feature that coz more worries, especially for the weak hands.

It wasn't to disappoint everyone and for the readers but this crypto investment is not really as a safe haven. Even though we say that this is not a safe haven but still people will come for investment because they are taking the risk and knowing that they can still make good money in here if they are wise and smart enough to manage the risk.

[kryptqnick]

Volatility is a huge obstacle, I agree about that. Another big problem I see is scalability. If Bitcoin is to be a save haven, many people should be able to easily transfer their money/assets into Bitcoin and perhaps use Bitcoin in the meantime or indefinitely if other things fail. The problem is that while currently transaction fees are pretty low, they can get ridiculous pretty fast if many people suddenly join the game.

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.

I don't think that it's even comparable, come on. Gold can be stable for years and huge changes there are still very small ones if compared to Bitcoin. I don't think calling gold 'volatile' is correct in this context.

[bitmover]

I don't think that it's even comparable, come on. Gold can be stable for years and huge changes there are still very small ones if compared to Bitcoin. I don't think calling gold 'volatile' is correct in this context.

Can't call gold volatile? Gold has high volatility, it is not stable against USD.

in the last 1 year gold was up 57%, while bitcoin is  46%.

57% man! In a single year. That's pretty high volatility. Since 2014 it is 260%!!!

260%.

Gold stable for year? Tell me one stable please...

[ololajulo]

95% of reported Bitcoin trading volume is fake.

Bitcoin has no liquidity problems.  Even if 95% is fake, 1 billion usd volume is pretty high.

Do you need to sell more than 1billion usd in bitcoin per day? Ffs
Saying that bitcoin cant be a safe haven because it lacks liquidity is just false.

I doubt the 95% fake volume because most of the top exchanges has more than 40% of this trade and If they do where did get that high on the fake volume. They trade high volume, have high number of users and traffic, also located in places of high interest. Another portion of the OTC is mostly not added to this volume and it huge both for altcoins and bitcoin,

[d5000]

95% of reported Bitcoin trading volume is fake.

Bitcoin has no liquidity problems.  Even if 95% is fake, 1 billion usd volume is pretty high. [...] Saying that bitcoin cant be a safe haven because it lacks liquidity is just false.

For a speculative asset, it may be enough. For an asset aspiring to become a global (and potentially more stable) currency, however, liquidity is really low. Currencies are not only traded on forex markets. You trade your currency every time you buy a coffee or whatever, or even if you buy Bitcoin or stocks.

Additionally, in currencies order books can be viewed as extremely thick. If you buy your coffee, you don't set a limit order 2% below of the real price, but instead buy instantly at a value very close to the price, because you assume the price of these goods are fair and won't change during the day (there are exceptions to this rule, like hyperinflations, of course).

That is one of the main reasons why currencies are so stable and are seen often as a "safe haven". Bitcoin still can't really count with that advantage. If you sell >100 BTC often you already move the price. Those who want a "safe haven" status have to find other reasons, like its scarcity or the "stock-to-flow" theory, but these reasons in my opinion are not convincing enough to last long term and sustainably - altcoins show that even very "scarce" cryptocurrencies can erode completely.

So an increase of liquidity is still top priority for Bitcoin is important if it wants to become a safe haven in the same way than a fiat currency. (Gold, as I wrote, is completely another story because of its millenia-long tradition as value storage.)

[XCANA]

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

Well, this is hard to say because this technology called Bitcoin was created as a method of payment, also, it potential was found as an investment method which when invests on a long-term can yield profits. Bitcoin been seeing as a save haven from bitcoiners should be rethink because we could have imagine Bitcoin to stand the trying Period during the early outbreak of the coronavirus pandemic. This pandemic has shown to us that, Bitcoin shouldn't be see as a save haven but method of payment and investment.

[gentlemand]

Bitcoin has no liquidity problems.  Even if 95% is fake, 1 billion usd volume is pretty high.

Do you need to sell more than 1billion usd in bitcoin per day? Ffs
Saying that bitcoin cant be a safe haven because it lacks liquidity is just false.

Of course it does. That's billions of dollars of churn with coins and dollars that rarely leave exchanges. If someone turns up with an urgent need to get rid of several thousand coins at once we'll sure as shit feel it reverberate through the market.

If there was a proper panic and everyone ran for the door you might be able to realise a respectable price for 1-5% of the entire supply before the price was flattened completely.

The reason for all the violent moves we get is the lack of liquidity.

[bitmover]

Currencies are not only traded on forex markets. You trade your currency every time you buy a coffee or whatever, or even if you buy Bitcoin or stocks.

Additionally, in currencies order books can be viewed as extremely thick. If you buy your coffee, you don't set a limit order 2% below of the real price, but instead buy instantly at a value very close to the price, because you assume the price of these goods are fair and won't change during the day (there are exceptions to this rule, like hyperinflations, of course).

When you buy a coffee with bitcoin, that volume doesn't show up in coinmarketcap or whatever website. This reported volume is only for exchanges volume, this has nothing to do with blockchain transactions.

All this volume that happens on-chain is not reported in the volume or liquidity we are talking about here.

That is one of the main reasons why currencies are so stable and are seen often as a "safe haven".

Only USD is considered really a safe haven, maybe euro. The rest of the 100 fiat currencies out there are really not a safe haven. The currency of my country just lost about 30% value against USD in this corona virus crisis.

Bitcoin still can't really count with that advantage. If you sell >100 BTC often you already move the price.

I strongly disagree with this, and all data provided by all websites like coinmarkecap shows exactly the opposite: We have a daily  46 billion usd volume, which is like 4,267,041 BTC daily!!

100 btc is nothing here, as we get new 3000 BTC everyday just from mining.

Those who want a "safe haven" status have to find other reasons, like its scarcity or the "stock-to-flow" theory, but these reasons in my opinion are not convincing enough to last long term and sustainably - altcoins show that even very "scarce" cryptocurrencies can erode completely.

So an increase of liquidity is still top priority for Bitcoin is important if it wants to become a safe haven in the same way than a fiat currency. (Gold, as I wrote, is completely another story because of its millenia-long tradition as value storage.)

Well, we can agree that we disagree.

[d5000]

When you buy a coffee with bitcoin, that volume doesn't show up in coinmarketcap or whatever website. This reported volume is only for exchanges volume, this has nothing to do with blockchain transactions.

While this is true, the volume of Bitcoin transactions in comparison to the trading volume on exchanges is still small. It's about 500 million to 2 billion USD per day, which is less than 3-5% of the volume on exchanges, in the best case (only a relative small proportion of these transactions are real payments, most are exchange deposits etc.). We could add LN transactions (which we can't measure that easily) but there is still no real boom on LN, so I guess these transactions don't really add much volume.

In the case of major fiat currencies, in addition to the already high forex trading volume, a high volume of daily trades to goods and services of all kinds is carried out. And even more important: a merchant only in exceptional situations (mostly in countries with major inflation) will change the price of a good once or more every 24 hours. This adds a lot of stability.

Only USD is considered really a safe haven, maybe euro. The rest of the 100 fiat currencies out there are really not a safe haven. The currency of my country just lost about 30% value against USD in this corona virus crisis.

This may be true in some cases, but even very inflationary fiat currencies (ARS, VEF ...) are normally moving much less erratic than Bitcoin: they move often only down, and by a slight percentage per month (in the case of the ARS the depreciation is about ~2-3% per month). The corona crisis is also a heavy-impact event which doesn't occur every year.

I think however that Bitcoin should aspire to deliver better numbers, eventually, than weak fiat currencies.

Bitcoin still can't really count with that advantage. If you sell >100 BTC often you already move the price.

I strongly disagree with this, and all data provided by all websites like coinmarkecap shows exactly the opposite: We have a daily  46 billion usd volume, which is like 4,267,041 BTC daily!!

Yep, compared to the total volume 100 BTC seem not to be so much ... but what I wanted to say is that you can significantly move the price with a major market sell order on a single major exchange.

I just looked at the Bitstamp order book: if you sell a market order of 100 BTC you will lower the BTC/USD price about 55 USD (from ~7770 to 7715). This is an 0,7% move, which I consider already significant. You can say now that most people would place a limit order, but in forex markets you would need much more volume to move even 0.1%. And if this 100 BTC market sale occured at Bitstamp, chances are that due to arbitrage on other exchanges it also would drop. With a bit more (200-300 BTC) you can already start a micro-panic. (Not considering that we're currently in a slightly bullish phase and order books are thicker than usually on the bid-side).

Well, we can agree that we disagree.

OK, here I think I agree

[wwzsocki]

...I just looked at the Bitstamp order book: if you sell a market order of 100 BTC you will lower the BTC/USD price about 55 USD (from ~7770 to 7715). This is an 0,7% move, which I consider already significant. You can say now that most people would place a limit order, but in forex markets you would need much more volume to move even 0.1%. And if this 100 BTC market sale occured at Bitstamp, chances are that due to arbitrage on other exchanges it also would drop. With a bit more (200-300 BTC) you can already start a micro-panic. (Not considering that we're currently in a slightly bullish phase and order books are thicker than usually on the bid-side)...

Of course, you will move BTC price more easily than Euro or USD because these markets are significantly bigger. That was my major concern because from some time we see very high leveraged trades that are possible on multiple exchanges and flash crashes caused by liquidations of these trades. In my opinion, this is the main problem that causes so high volatility and stops BTC from being a safe haven.

Of course, we can do nothing to stop exchanges that offer such high leverage and we can only hope that the BTC market will grow significantly and fast without any further flash crashes which will bring the price finally to 0$. We were very close at 12.03 when BTC dropped to 4000$ and such an event is very likely to happen again because nothing changed.

Nobody learned a lesson from this event and next time there could be no such luck as last time that bots caused Bitmex to go offline for half hours during the sell-off   .

[tbct_mt2]

Can't call gold volatile? Gold has high volatility, it is not stable against USD.

in the last 1 year gold was up 57%, while bitcoin is  46%.

57% man! In a single year. That's pretty high volatility. Since 2014 it is 260%!!!

260%.

Gold stable for year? Tell me one stable please...

People call bitcoin is highly volatile asset because they hate it. They want to own bitcoin but they fear when they look at newspapers, websites, fake news, and price movements. Years ago, the term "virtual currency" is very common. That term, once upon a time, prevent people to learn what Bitcoin is and invest in bitcoin. Nowadays, we don't see that term too common but there are still many people who hate bitcoin and keep spreading fake news, wrong technical terms on bitcoin.

Instead of looking at Gold price and its volatility, people simply says Gold is a stable asset. LOL.

[Casdinyard]

Can't call gold volatile? Gold has high volatility, it is not stable against USD.

in the last 1 year gold was up 57%, while bitcoin is  46%.

57% man! In a single year. That's pretty high volatility. Since 2014 it is 260%!!!

260%.

Gold stable for year? Tell me one stable please...

People call bitcoin is highly volatile asset because they hate it. They want to own bitcoin but they fear when they look at newspapers, websites, fake news, and price movements. Years ago, the term "virtual currency" is very common. That term, once upon a time, prevent people to learn what Bitcoin is and invest in bitcoin. Nowadays, we don't see that term too common but there are still many people who hate bitcoin and keep spreading fake news, wrong technical terms on bitcoin.

What is wrong with people these days is they are scared of what they know, it's pretty natural to human but the fact that bitcoin is still standing still conquering heights that we have already set is the thing that what it makes so strong digital currency right now. But there are really some instances that a bad news is going out and making some destructive impact on bitcoin's image as digital currency and asset those are scams and frauds that used the name of bitcoin in illegal way.

Instead of looking at Gold price and its volatility, people simply says Gold is a stable asset. LOL.

Because gold has been here for ages, gold has a physical value as it is a precious metal unlike bitcoin but there is nothing to worry about gold and bitcoin.

[Skieleton]

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/

Personally, I like to earn money and buy coins from panics for fractions of their value. Subsequent increases are merely the icing on the cake ". Personally, I always set positions without leverage. If ever
I decide to use the leverage only in "certain" situations and in cases positions being small fractions from the reserve of capital and leverage at levels on the order of 2-3 times, and max. 5-10 times with "certainty". Personally better I achieve results, and without unnecessary risk, by trading the traditional method: cheap to buy, and quite expensive to sell, after waiting patiently or on "needles". Protection already of owned capital should be more important than its possible multiplication. and disturbance of the balance between capital protection and risk taking - it is already
pure gambling. And you don't earn on gambling (!). This is how trading differs from gambling - Common sense and an approach completely devoid of unnecessary (!) Emotions, which disturb perception. For pure Joy; D the time will come when we will see the effects of this cool, common sense trade and when we reward ourselves for these effects. When we pay a fraction of the yield, reinvesting the multiplied capital.

[d5000]

Of course, you will move BTC price more easily than Euro or USD because these markets are significantly bigger.

I wanted to add an observation to that issue. In my opinion, the vulnerability of the BTC market to drop significantly even if there are only a couple of medium-sized sell orders together, is not only caused by a lack of market size but also by the expectations of the market participants.

On the EUR/USD forex market nobody (or at least almost nobody) would place a buy order for 1 USD on EUR 0.50 for example. Most orders will be very close to the current price, because people know that the price is extremely unlikely to drop more than ~5% in a single day. In Bitcoin, we have lots of orders well down and above the spot price. People are expecting Bitcoin to rally and drop more heavily, so they set their orders accordingly, to benefit from these moves.

I think this is a kind of vicious cycle: Bitcoin is volatile. So it attracts people who want to benefit from the price swings (positive and negative ones). And this leads to thin order books that do not "back" the Bitcoin price very much but make it vulnerable to drops - and to FOMO on the other side. Your observation that many people trade with too high leverage ratios is also connected to that - it's simply too easy to make profit with it, so people try to bet on big price swings, even if the risks are large, too.

[AniviaBtc]

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.

You need to know that bitcoin is not for a long term investment, you should manipulate it depending on the market situation. We all know that bitcoin is volatile and the market so every time that you will make a move, you should consider a lot of factor that can affect its price.

Bitcoin is only for a short term investment because the action and strategy that you will perform should be based on the market movement in order to prevent losses. For the bitcoin to become a safe haven, people around the world should adopt bitcoin as a digital currency and the volume of people that uses it should increase so that bitcoin can no longer have its lower price.

You can grow in using bitcoin but I guarantee you not to treat it as a long term investment.

[Sk_Ezaz]

I cannot say that bitcoin may be a shelter because recently we saw a serious panic where the worth drops such a lot and it's not a characteristics of a secure heaven. the foremost popular shelter is Gold but its value is additionally drop when the pandemic start, the worth of bitcoin is just too volatile and on behalf of me it's not consider as a secure haven investments.