Is Bitcoin a Safe Haven?

This question keeps coming in crypto articles and communities and I’d like to lay it to bed once and for all.

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Safe haven assets are things that tend to go up in value when there is prevalent uncertainty or fear in the world. Gold, Bonds, and the Japanese Yen are all considered Safe Havens.

Bitcoin is not a safe haven asset and bears little or no correlation with other traditional markets at this time. The cryptocurrency markets are still too small to have any effect on other markets.

The entire market cap of all cryptos is now about $100 Billion. To put it in perspective, the market cap of just the S&P 500 in the USA is standing at more than $20 Trillion.

So, the answer is no. Not in a traditional sense anyway. However, the practical use cases in specific countries like Venezuela, Argentina, Zimbabwe, Iran, Iraq, Egypt, and even Russia, that are seeing extreme currency risk proves that bitcoin is an excellent store of value.

So though it does not correlate at the moment, this is a form of digital gold.

-Mati Greenspan
eToro, Senior Market Analyst

Please note: All data, figures & graphs are valid as of June 15th. All trading carries risk. Only risk capital you can afford to lose.

Market Overview

The traditional markets went on a wild ride yesterday. There was a big swing down, then a big swing up only to wind up in the same place it started.

Though volatility spiked around the time of the Fed meeting, the VIX volatility index still closed at near record low levels.

As was widely expected by the markets, the Fed did indeed raise their interest rates by 0.25% despite stagnant inflation and wage growth.

The headlines that are saying that Fed has defied inflation but actually what’s happening is that they’re playing a huge game of chicken with the financial markets.

If the Fed blinks at this point or acknowledges that the economy isn’t doing well, it could set the already overvalued stock market for a tumble… and we wouldn’t want that.

What was more important yesterday was the Fed’s aggressive stance in offloading their bloated balance sheet. They have about $4.5 Trillion worth of assets that they purchased during the quantitative easing from 2009 to 2014 that they would like to start selling back to the market by the end of the year.

It’s a move intended to show confidence in the economy.

Greek Meeting Today

It’s the same old story that has been playing out since 2012. Greece currently has more debt than they could ever hope to pay back. They’ve already received two bailouts and they will need a third in order to avoid bankruptcy by next month.

The IMF wants to help but only if the EU is willing to write off some of the unsustainable debt that is choking the Greek economy. Germany is not willing to forget, or forgive and so we have a standoff.

The most likely outcome is that we see some sort of temporary deal to release enough funds to avoid another Euro crisis but a long term solution is still very far away.

Nonetheless, we will keep our eyes on the news as this story has massive market moving potential if anything changes.

Massive Crypto Correction

The cryptocurrency markets are currently seeing the biggest pullback in their short history.

Of the top 100 digital coins, only 3 are in green over the past 24 hours. The entire market has lost about $19 Billion from top to bottom.

Many traders in eToro are seeing this as a golden opportunity.

This remains the most high risk investment you could possibly take and it is possible we could see bitcoin around $1000 again before not too long. However, given the breakthrough in Japan and possibility of the same happening in India, there is a distinct possibility that over the next 24 hours we could see the lowest price that will be in the next 24 years.

Thanks for reading & have an amazing day!

This content is for information and educational purposes only and should not be considered investment advice or an investment recommendation.

Past performance is not an indication of future results. All trading carries risk. Only risk capital you’re prepared to lose.

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade.