While crypto investors are used to such moves, Bitcoin’s strength comes as the macroeconomic and geopolitical stage has started to rapidly deteriorate. This dichotomy has resulted in many economists, investors, and even politicians starting to give Bitcoin a nod as a store of value and a safe haven.
And while BTC’s momentum has clearly tapered off since the blow-off top in late-June, this narrative doesn’t seem to be losing steam one bit.
Finally Trading Alongside Gold
Bitcoin has long been touted as an alternative to gold. The precious metal shares a number of characteristics with the cryptocurrency: decentralization, non-sovereignty, scarcity, fungibility, among others.
But only recently has Bitcoin begun to trace the price action of gold. In fact, as spotted by Bloomberg, the correlation between the two assets has nearly doubled in the past six months, rising to just over 0.842 from 0.496. Just look to this chart from Binance’s research division, which shows that when gold spiked due to a fresh Trump tariff, so did the world’s favorite cryptocurrency.
$BTC has rallied 📈 together with multiple safe-haven assets after Trump's latest tariff storm.
— Binance Research (@BinanceResearch) August 2, 2019
Speaking to CNBC’s “Fast Money” panel, Brian Kelly of BKCM touched on this correlation. According to Kelly, this is a clear sign that investors playing macro trends are starting to use “Bitcoin as a currency hedge”, which would be a massive step forward in the cryptocurrency’s life cycle.
He adds that the correlation between Bitcoin and gold is likely to continue, especially as there are “multiple currencies around the world breaking down at the same time and institutional investors that are actually embracing this asset class.”
In fact, the industry investor called the macroeconomic backdrop a “perfect storm” for Bitcoin to become further acknowledged as a store of value, which is likely what BTC needs to kickstart the next leg of the ongoing bull market.
— CNBC's Fast Money (@CNBCFastMoney) August 12, 2019
Kelly wasn’t the only investor on CNBC to have perpetuated the safe haven narrative. Not 24 hours after his “Fast Money” segment, Jihan Bowes-Little, an investor of Coinbase through his venture fund Bracket Capital, went on CNBC’s “Squawk Box” to argue that Bitcoin’s strongest use case is “as a stored value”.
— Squawk Box (@SquawkCNBC) August 13, 2019
And just a week earlier, Circle’s Jeremy Allaire explained that he sees that “the broader theme of, you know, Bitcoin specifically, crypto more broadly participating in these global macro forces is becoming more and more clear.”
There Remain Naysayers
Despite the clear correlation and the countless respected individuals claiming that Bitcoin is becoming a fully-fledged safe haven, there are a few that claim this narrative is catching on too fast.
As reported by Blockonomi previously, an investment strategist at the anti-crypto (it banned clients from making cryptocurrency payments) Bank of Montreal explained that Bitcoin can’t be a safe haven due to its volatility.
Brian Belski argued that Bitcoin’s current investment appeal is mainly derived from its “sexy” values, effectively calling it a fad and an asset will little or no inherent value.
And Forex.com analyst Fawad Razaqzada told Reuters that the recent correlations seen between Bitcoin and gold are nothing more than short-term trends, and are thus not indicative of BTC’s long-term potential as a hedge against risks.
Razaqzada elaborated that due to cryptocurrency companies and exchanges being so susceptible to hacks, it would be hard to classify Bitcoin as a safe haven play.