In recent times, Bitcoin‘s exceptional growth is undeniable. However, recent analyses indicate that it hasn’t drawn in significant “safe money” investments like traditional safe-havens such as gold during market turmoil.
It became clear, as reported by Kaiko, that there was a heightened interest in these assets due to the intensifying conflict in the Middle East.
Bitcoin Struggles to Capture Safe-Haven Status
During the same period when gold and the US dollar were on the rise, bitcoin’s worth decreased by approximately 6%. A possible explanation for this could be the Bitcoin halving event, known for causing temporary price fluctuations.
After significant market incidents like the US banking crisis and Russia’s invasion of Ukraine, Bitcoin’s price response suggests more than just market forces at work. In both cases, Bitcoin experienced a substantial price increase. However, its value did not continue to rise following the Hamas attack on Israel.
Kaiko’s findings indicated that Bitcoin’s value change greatly depending on which fiat currency was being compared to it. Notably, substantial growth occurred when contrasted with currencies like the Turkish lira, Argentinian peso, and Nigerian naira. However, a more modest increase was seen against the US dollar.
As political conflicts intensify, energy costs climb higher, and central banks adopt differing approaches to monetary policy, currency fluctuations may become more pronounced in the near future.
US Treasuries Disappoint Investors Amid Market Turmoil
Lately, the world’s economic landscape has experienced significant instability with the COVID-19 pandemic and its resulting supply chain issues causing rampant inflation not witnessed for many years. To combat this, central banks such as the Federal Reserve have taken bold steps by increasing interest rates.
In the midst of economic uncertainty, bitcoin saw a remarkable rise of almost 1,000%. During this time, it managed to surpass the returns of more conventional safe-asset options like gold and US Treasuries.
During the same time frame, gold experienced a noteworthy rise of approximately 33%, but US Treasuries took a different path and dropped by around 12% starting from March 2020.
In contrast to the traditional belief that gold and Treasuries perform well during market upheavals, this trend indicates a developing perspective that bitcoin could eventually become the preferred safe-haven asset due to its renowned instability.
Some experts believe that despite BTC going through considerable drops in value previously, its trend over the long term indicates considerable expansion. This growth enhances the buying power of investors. Moreover, due to its decentralized structure and finite issuance of 21 million coins, Bitcoin is an alluring safeguard against economic instability.
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2024-04-23 23:32