Bitcoin As a Safe Haven Case Still Lacks Proof

As the global markets went down, discussion have been lead about bitcoin (BTC) as a safe haven – with many not believing it to be so.

As bitcoin climbed while stocks were falling, some in cryptoverse argued it was acting like a safe haven in a manner similar to gold, while others denied that assumption, stressing that it was related to the potential for quick gains rather than its safe-haven properties. Craig Erlam, senior market analyst at OANDA told Reuters that the link between BTC and stocks is unreliable on a day to day basis.

Meanwhile, crypto market analysis firm Coin Metrics, in their latest weekly newsletter analyzed the correlation between BTC and gold and concluded that it is weak, adding that the market participants should “critically examine the safe haven narrative and be open-minded to the possibility that the relationship between Bitcoin and gold is spurious.”

However, according to the firm, it’s likely that in the times of the heightened geopolitical and macroeconomic risks and the desire for the stability of haven assets, the intrinsic qualities of Bitcoin and gold “can experience short-lived periods of high correlation.”

"Most troubling is that the undercurrent of social tensions is occurring in a world where macroeconomic conditions and asset prices are quite good. Under a global recession, these social tensions should increase in intensity and could lead to a watershed moment in Bitcoin’s status as a safe haven asset," they concluded.
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Below you can see bitcoin (in blue) since the crypto market sprang back to life on April 2nd, with gold overlayed (in orange). Notice the parting of ways over the last few days:

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Many other observers have also noticed that BTC wasn’t acting like a safe haven lately, with some saying that it’s normal behavior, others believing that it never correlated with other asset classes and that it’s more valuable than gold, third blaming the "wales" for using the panic to gather more BTC, fourth stating that it’s hedged until the volume buyers return, fifth saying that Bitcoin is a risk asset and that people won’t buy it when they’re trying to avoid further losses, etc.

Travis Kling, CEO of crypto asset management firm Ikigai, says that it could be due to the market structure issues, or that BTC is not strong enough to handle all types of stress, or that BTC can rally with gold when it comes to tariffs but not global growth slowdown. Economist and trader Alex Krüger argues that nobody cares about the facts but interprets new evidence to confirm their existing beliefs, adding that BTC temporarily traded in connection to the Chinese yuan due to speculative, not hedging flows.
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That’s not all, as an Ethereum core developer, Eric Conner tweeted that “The most delusional thinking in crypto today, hands down, is that it'll be used as a flight to quality in a global recession”, with quite a few people agreeing, and other arguing that the most dependable currency in a global recession is USD, while the easiest way to get exposure to USD would be a USD-pegged stablecoin. Meanwhile, Arianna Simpson, the founder of Autonomous Partners, an investment fund focused on cryptocurrencies and digital assets, finds that there’s not enough data to claim that BTC is or is not inversely correlated with other asset classes.

Meanwhile, according to Jeff Dorman, chief investment officer of Arca, a Los Angeles-based crypto asset manager, it's not practical to believe that every participant in global risk markets is using bitcoin as a hedge or a flight to quality.

"And they are therefore not selling bitcoin when markets go back to ‘risk on’. But since Bitcoin is such a small asset relative to the rest of the markets, it doesn’t take much to push bitcoin one way or the other,” he told Bloomberg.

However, Mati Greenspan, senior market analyst at the eToro trading platform, pointed out that Bitcoin may be considered a risky asset for most investors but for some people it is "clearly a safe haven."

"Checking on the bitcoin peer-to-peer market at localbitcoins.com, we can see that offers in Argentina range from USD 10,790 to USD 12,764 per bitcoin as of this writing, while bitcoin is trading below $10,000 in most popular exchanges. Some offers in Hong Kong are going as high as USD 15,500 at the moment," he said, stressing that bitcoin is still clearly classified as a risk asset. "This is both due to its extremely volatile nature and because it is an emerging market with very few guarantees of what it will look like in the future."

As the sell-off in the crypto market is continuing this week, bitcoin, dropped to almost USD 9,500 today, or the level last seen on July 31, before rebounding above USD 10,000 again.