Galen Moore is a member of the CoinDesk Research team. The following article originally appeared in Institutional Crypto by CoinDesk, a weekly newsletter focused on institutional investment in crypto assets. Sign up for free here.
Investors are beginning to have a clear sense why bitcoin exists: it’s digital gold, a narrative that has emerged clearly as other assets flounder, gasping for air in the muddy water of shallow memes.
Ethereum has hopped from story to disjointed story; now it’s “money” (OK). Nobody knows what Ripple, er, XRP is.
If bitcoin is digital gold, then it must be a haven in times of crisis – a “risk-off” asset. Any thoughts of bitcoin being a safe haven have been put to bed in the past 10 days and can be found there thrashing in their own clammy sweat, racked by fever-nightmares of 2018.
The question is, can bitcoin become a safe haven? We may be about to find out. Born during the last global financial crisis, bitcoin has yet to see one. In the CoinDesk Research white paper, “Is Bitcoin a Safe Haven?” we look at some of the theories around how bitcoin might perform during a macroeconomic crisis and present a few metrics that might be used to measure bitcoin’s response. You can download the paper here. This article will present an up-to-date look at a few of those metrics.
Bitcoin vs. gold
Some people you run into may show you a bitcoin chart next to a gold chart and point out similarities in their shape. Ignore it.
Bitcoin’s price has never shown a correlation with gold, positive or negative, for any length of time, since early 2015. Over the long term, it’s moved toward less correlation, not more.
Bitcoin vs. the yuan
A haven is in the eye of the beholder. Bitcoin may be a risk-on asset for venture investors in Silicon Valley, and a risk-off asset for people caught in a currency crisis. Bitcoin adoption in Venezuela is often cited to indicate the latter.
Bitcoin adoption in China may be another measure….