Bitcoin has had a lot of potential paths laid before it in the last 10 or so years. It began as an interesting cryptographic project and then lined up as a currency of the dark web. From there, Bitcoin’s value exploded and suddenly it was digital gold. Now, with the digital gold status almost cemented, people, including mainstream investors, are believing it could be a safe haven asset.
Traditionally, Bitcoin has been shunned as a safe have because, even though it often acts in negative correlation to market pressure, it has been seen as too volatile and unknown to be relied upon. Yet, the coin continues to be normalized, and legitimized, and now even traditional investors are starting to see its potential as a safe haven.
One traditional financier, Terry Duffy, CEO of the CME Group, has realized the power and potential of Bitcoin after his company managed to set a tone for institutional interest in Bitcoin derivative trading. He has spoken with CNBC and helped grow the safe haven narrative around Bitcoin.
Bitcoin like gold
The CME CEO was asked if he did believe that Bitcoin was becoming a safe have, and he agreed, stating that people are starting to use Bitcoin like they would gold, storing it up as an alternative in a time where the financial future of the globe is fairly uncertain.
Gold has long been the traditional safe haven asset, however, the precious metal is harder to trade for inexperienced investors, compared to Bitcoin, and it is sometimes seen as too safe with its gains falling far short of bitcoin’s impressive movements over the last five years, for example.
But, despite the volatility famed in the Bitcoin space, Duffy’s argument was based around the fact that Bitcoin consolidated near the $7,000 mark for a long time last year, despite strong bearish momentum towards the end of 2019. The price withstood the pressure and over the span of January 2020, Bitcoin surged above $9000 again and looks set to grow even more.
The importance of an alternative
One of the reasons that Bitcoin might be in the sights of institutional investors as an alternative to traditional assets is that there are ongoing fears that a recession could hit and a financial crisis emerges.
For investors, there will always be gold to invest in if things go sour in the markets, but if Bitcoin does emerge as a true contender to gold in times of financial uncertainty then there is a chance for quicker gains, and stronger ones, over a crisis.