Ever since it entered the fray, bitcoin, the largest crypto coin, was considered as a gold’s digital version, a safe haven investment which when the chips are down would hold on to its value, even when the other assets takes a beating.
However, the bubble was broken as it took a bolt from the blue in the last week as coronavirus wreaked havoc in financial markets. Bitcoin, contrary to earlier belief, showed the most significant decline and faired off far worse than the other digital assets.
While gold has been rallying, crypto-assets including bitcoin continue to face heavy sell-offs amid the growing global epidemic, challenging bitcoin’s safe-haven status,
After experiencing a bull run in 2019, Bitcoin got off to a flyer in 2020. A 40% hike led to a rise in value beyond $10,000. It went from $7,193 to $10,326. However, the joy was short-lived as then it plummeted by 50% to linger below the $5,000 in weeks.
Unlike Bitcoin, Gold Holding Its Ground
While gold also has experienced a slump too, it’s not as significant as the one bitcoin endured, the mainstay safe-haven asset dropped by 8%.
The primary purpose of a safe haven is to safeguard the investments in times of travesty. However, according to Assia, the problem with bitcoin lies in the sheer volatility it possesses, which stops it from becoming a safe haven in the current situation.
Interestingly, a report from eToro shows that bitcoin while crashing is still a choice investors are making, more bitcoin is being brought than being sold, as in the eyes of many this is a buying window.
The buying and hold approach is the theme right now in investors mind, and even the young and large investors are not shying away from loosening their pockets.
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