Could Bitcoin potentially serve as a safe haven in the upcoming economic crisis - page 3.

sunsilk

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Quote from: kripto_corumlu on August 15, 2023, 06:18:07 PM

Hello everyone,

there's a lot of discussion about an impending economic crisis.

It's been there since the pandemic has started and we're just seeing it being prolonged by a lot of factors that's happening through the global economy.

Quote from: kripto_corumlu on August 15, 2023, 06:18:07 PM

I'm curious about how Bitcoin will perform during this crisis. Will it function as a safe haven similar to gold? Or will its value decline significantly?

what do you think ?

With its history, you can say that it did well. But if you're just going to look at how much it was on 2021 bull run and today, you'll be disappointed.

But look at the overview of it on its entire history and it can still be said the best performing asset, if not, one of the best.

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Whether or not Bitcoin will be a safe haven during a major economic crash is the million dollar question for sure. It does appear to be breaking down in price along with the rest of the market, but it’s way too early to say definitively either way. One thing is certain though, at some point Bitcoin will be faced with a major recession and the market will have to choose up or down.

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Quote from: kripto_corumlu on August 15, 2023, 06:18:07 PM

Hello everyone,

there's a lot of discussion about an impending economic crisis. I'm curious about how Bitcoin will perform during this crisis. Will it function as a safe haven similar to gold? Or will its value decline significantly?

what do you think ?

It is assumed and hoped that one day, if an economic crisis occurs, Bitcoin could act as an inflation and crisis hedge. But, in my opinion, it is just an assumption. Looking at the recent bitcoin trends, the market fluctuated with US CPI data. In 2020 when the COVID pandemic hit the world all stock markets including Bitcoin prices crashed. Yes, you can say that the ROI on BTC investment is more and you can gain profit relatively quickly, and if you have the money you can buy the dip but for an economic crisis, gold is the best option.

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Quote from: bbc.reporter on August 15, 2023, 08:22:01 PM

@mk4. However, bitcoin's correlation with the more traditional markets has been going down. If this continues

It's back up, that's a month old article
https://www.fxstreet.com/cryptocurrencies/news/bitcoin-and-us-stock-market-correlation-shoots-up-is-btc-at-feds-mercy-again-202308151148#:~:text=Bitcoin%20correlation%20to%20the%20US,gone%20from%20%2D0.52%20to%200.21.

Quote from: Lucius on August 16, 2023, 09:30:43 AM

First of all, everyone should wake up from some enchanted dream where milk and honey flow in streams, interest rates don't exist and everyone earns exactly what they need. Since the pandemic was declared, we have actually been living in an economic crisis that has been further aggravated by the war in Ukraine and all those crazy measures implemented by various countries to prevent us from experiencing a complete collapse, are slowly but surely began to return to us like a boomerang.

But , but...all you need is buy Bitcoin!
It's proven that no matter what happens, even if an asteroid wipes all life from the Earth when the halving happens we're going to be rich!

I really don't understand why some think that crumbling economies, people out of jobs, bankruptcies, and suicides left and right would magically make all unemployed and bankrupt people pour their debts into bitcoin, and although I try every single f* time to ask these guys why do they think this will be the way things will unfold I still haven't got a single answer that is not signature quota material.

Quote from: Wind_FURY on August 16, 2023, 06:01:35 AM

OP, zoom out Bitcoin's chart to the maximum and tell me if that isn't a safe haven.

So, we need to zoom out past the period of economic crises that has set it to see the "safe haven" aspect.
Kind of....weird, let's say at least, isn't it?

xSkylarx

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Quote from: kripto_corumlu on August 15, 2023, 06:18:07 PM

Hello everyone,

there's a lot of discussion about an impending economic crisis. I'm curious about how Bitcoin will perform during this crisis. Will it function as a safe haven similar to gold? Or will its value decline significantly?

what do you think ?

Well, its history tells itself that bitcoin is somewhat of a safe haven but not totally because we know of its volatility, but when we base our decisions on history, we will know that the price keeps getting high, meaning if you put your money way back in 2016 into bitcoin, then for sure your money hasn't lost its value, even if you gain tons of profit on it. So I would probably say yes, but it is still not recommended because anytime it could be a price dump.

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Quote from: mk4 on August 16, 2023, 01:38:36 AM

Quote from: bbc.reporter on August 15, 2023, 08:22:01 PM

@mk4. However, bitcoin's correlation with the more traditional markets has been going down. If this continues after every bull and bear markets, we might witness bitcoin being considered by traditional finance as an alternative investment for hedging. The interest on a spot ETF for bitcoin is clearly a sign of this. I shake my head to the doubters.

The falling correlation has been noticed since July.

Bitcoin's (BTC) fortune is no longer tied to sentiment in the U.S. stock markets.
The 90-day rolling correlation of changes in bitcoin's spot price to changes in Wall Street's tech-heavy equity index, Nasdaq, and the broader index, S&P 500, has declined to near zero. That's the lowest in two years, according to data tracked by crypto derivatives analytics firm Block Scholes.

The dwindling correlation with traditional risk assets means that crypto traders focusing solely on traditional market sentiment and macroeconomic developments may face disappointment.

Source https://www.coindesk.com/markets/2023/07/05/bitcoin-is-no-longer-correlated-to-us-stocks/

I couldn't count how many times bitcoin has correlated and de-correlated from traditional markets since the past. Who's to say it can't correlate sometimes soon again? I wouldn't make investment decisions based on this personally.

Yes hehehe, I was assuming that the decorrelation would become stronger and continue as the traditional markets dump. However, what might also occur is the traditional markets dump on a higher percentage compared to bitcoin and make bitcoin appear like a more stable investment. Bitcoin has been on low volatility when it is not pumping. High volatility on only arrives when there is a pump. This might be our signal that bitcoin is entering a bull market or a trigger.

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Quote from: kripto_corumlu on August 15, 2023, 06:18:07 PM

Hello everyone,

there's a lot of discussion about an impending economic crisis. I'm curious about how Bitcoin will perform during this crisis. Will it function as a safe haven similar to gold? Or will its value decline significantly?

what do you think ?

Possible. I mean I don't think people who have Bitcoin would suddenly run away and trade their coins for gold (or any other asset)all of a sudden in an economic crisis since there's no connection between the local currencies and Bitcoin in the first place. People would then scramble to come and look for assets that would help them avoid the devaluation of local currencies which inevitably would lead them to Bitcoin (as one of the options that is). It is volatile however, so I guess that's one risk of it in comparison to gold.

At the very least, I don't think I see Bitcoin dropping in value in an economic crisis even if people don't buy it to avoid fiat.

Fatunad

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There's no such thing as safe haven, specially on things that it is really that volatile and something that had been globally accepted and recognized. Speaking about economic crisis then this is something which is inevitable
even just simply speaking about that non-stop inflation which it do makes living a great challenge.I do agree on some points that having other source of income or investment is the best thing that you should
do so that you would be able to make yourself that survive if ever this one happens since you do have multiple income source.

Quote from: Aanuoluwatofunmi on August 16, 2023, 10:37:41 AM

When you invest in bitcoin, you have the consciousness that it's going to yield you massive increase and then you hold or trade, the bitcoin network being a decentralized network and bitcoin itself being volatile comes with diverse opportunities for it investors, when there's economy inflation, the fiat currency is being affected but a decentralized network does not because it works on a different and entire network, the problem currently happening is what led to the massive adoption of bitcoin over fiat because the people needed a change in financial economy, we are already feeling the impact of bitcoin and more to come.

Investing on Bitcoin is always been that a good option for you to take.Even though this one doesnt assure about success or profits in the future but we arent that blind on not to see its potential basing up
on what it had been done on the last 1 decade which we can definitely be having that kind of positivity that it would really be still having the potential to reach out new heights in the future.
This is why it isnt really that bad an option for you to take on.

justdimin

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Quote from: Lucius on August 16, 2023, 09:30:43 AM

First of all, everyone should wake up from some enchanted dream where milk and honey flow in streams, interest rates don't exist and everyone earns exactly what they need. Since the pandemic was declared, we have actually been living in an economic crisis that has been further aggravated by the war in Ukraine and all those crazy measures implemented by various countries to prevent us from experiencing a complete collapse, are slowly but surely began to return to us like a boomerang.

Bitcoin managed all this well, although we should not forget that on the day the pandemic was declared, it lost about 50% of its value, and if I'm not mistaken, gold lost about 6% - which partially answers the question posed by the OP. Accordingly, I can agree with some other members that it can be somewhat misleading to say that BTC is a "safe haven" considering the volatility, which does not necessarily have to be the result of supply and demand, but also of political decisions that go in the direction of regulations or bans on possession or trading in the same in some countries.

It would be logical to always adhere to the rule of not keeping all eggs in the same basket, which means diversifying our investments in order to reduce risk.

This means that we are going to end up with a return that would be basically keeping its value and that's about it. This isn't really something we should be aiming at because it would be better if we could end up with a return that would be bigger.

By basic sense, what I mean is that if there is a 10% inflation in your nation and you made 10%, then you didn't made any profit at all, if your nation has 10% inflation and you made 7% then in fact you made a loss and if your nation has 10% inflation but you made 15% then you started to make some profit. That's how it's calculated and thankfully I am doing better than I expected, right now I am making more income than what the inflation has risen so I am making a profit.

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Quote from: kripto_corumlu on August 15, 2023, 06:18:07 PM

there's a lot of discussion about an impending economic crisis. I'm curious about how Bitcoin will perform during this crisis. Will it function as a safe haven similar to gold? Or will its value decline significantly?

Bitcoin is always the most valuable investment for the long term. In the short term, some chances can be evaluated. In many countries where the local currency is not the dollar or the euro, people have been in a very difficult situation due to both inflation and the depreciation of local currencies. Countries with the local currency of the dollar or the euro were also in trouble with inflation. It still continues this way. Especially the people of the countries in the situation I gave an example see Bitcoin as a safe haven. Many citizens of countries whose local currencies are devalued should invest in Bitcoin. They will always win in the long run.

The size of the economic crisis is also important. If there is a major crisis around the world, I can still see Bitcoin as a safe haven.

Of course there are many alternatives. You can research and learn. Everyone has their own preferences. Some argue that Bitcoin may not be safe during a crisis.

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Quote from: kripto_corumlu on August 15, 2023, 06:18:07 PM

there's a lot of discussion about an impending economic crisis. I'm curious about how Bitcoin will perform during this crisis. Will it function as a safe haven similar to gold? Or will its value decline significantly?

Bitcoins are almost equal to digital gold to be honest, but yes there are many things, that made Bitcoins completely different from this digital gold also. Gold or Digital gold are centralised in nature, that is they are governed or ruled by a particular body, but in the case of Bitcoins, it’s decentralised. Now regarding the value of Bitcoins during a crisis might surely come down, but as these are limited in numbers, soon the price will go up also. When price will go down, people will accumulate more Bitcoins and hence it will increase the demand of the coin.

Aanuoluwatofunmi

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When you invest in bitcoin, you have the consciousness that it's going to yield you massive increase and then you hold or trade, the bitcoin network being a decentralized network and bitcoin itself being volatile comes with diverse opportunities for it investors, when there's economy inflation, the fiat currency is being affected but a decentralized network does not because it works on a different and entire network, the problem currently happening is what led to the massive adoption of bitcoin over fiat because the people needed a change in financial economy, we are already feeling the impact of bitcoin and more to come.

Lucius

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First of all, everyone should wake up from some enchanted dream where milk and honey flow in streams, interest rates don't exist and everyone earns exactly what they need. Since the pandemic was declared, we have actually been living in an economic crisis that has been further aggravated by the war in Ukraine and all those crazy measures implemented by various countries to prevent us from experiencing a complete collapse, are slowly but surely began to return to us like a boomerang.

Bitcoin managed all this well, although we should not forget that on the day the pandemic was declared, it lost about 50% of its value, and if I'm not mistaken, gold lost about 6% - which partially answers the question posed by the OP. Accordingly, I can agree with some other members that it can be somewhat misleading to say that BTC is a "safe haven" considering the volatility, which does not necessarily have to be the result of supply and demand, but also of political decisions that go in the direction of regulations or bans on possession or trading in the same in some countries.

It would be logical to always adhere to the rule of not keeping all eggs in the same basket, which means diversifying our investments in order to reduce risk.

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Quote from: kripto_corumlu on August 15, 2023, 06:18:07 PM

Hello everyone,

there's a lot of discussion about an impending economic crisis. I'm curious about how Bitcoin will perform during this crisis. Will it function as a safe haven similar to gold? Or will its value decline significantly?

what do you think ?

For some instances maybe bitcoin will be the option of people seeking for extra income since this one is well known to give profits to people who trade or invest it. But if we talk about safe haven for now it cannot happen knowing the big risk they can possibly face and maybe they can't cope up with its volatility especially if the price fall and some people cannot do any good decisions especially if they are new accumulators.

Maybe we can see a lot of hype for bitcoin as alternative when crisis occur and for sure we can see people will accumulate to anticipate for possible pump. New accumulators should make sure that they will not buy in FOMO because if the hype fades for sure they might lose their money for wrong anticipation on turns of events.

Wind_FURY

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OP, zoom out Bitcoin's chart to the maximum and tell me if that isn't a safe haven. Bitcoin's volatility can be deceiving sometimes, it's a must to smoothen the chart by having a long term viewpoint. Plus if you ask me, it's Bitcoin's very volatile nature that requires us plebs to have a low time preference if you want to buy it as an investment.

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Quote from: kripto_corumlu on August 15, 2023, 06:18:07 PM

Hello everyone,

there's a lot of discussion about an impending economic crisis. I'm curious about how Bitcoin will perform during this crisis. Will it function as a safe haven similar to gold? Or will its value decline significantly?

what do you think ?

In conditions of economic crisis like now Bitcoin can indeed become a safe haven asset, but it will not be so similar to gold whose price always tends to be stable in the long term. As for Bitcoin itself, it still has the potential to increase and decrease in the not so distant future, although if you want to use it as a safe haven, I think that's fine too because you can still wait for a price increase to get a better value than before through Bitcoin.

But with gold, you are just like saving money expecting value stability through assets and for predicting the value of Bitcoin myself, I personally still can't be sure whether it will drop significantly again, or even increase significantly again for certain reasons such as cycles and others.

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Quote from: kripto_corumlu on August 15, 2023, 06:18:07 PM

Hello everyone,

there's a lot of discussion about an impending economic crisis. I'm curious about how Bitcoin will perform during this crisis. Will it function as a safe haven similar to gold? Or will its value decline significantly?

what do you think ?

This question has been asked 1000 times in the last 10 years. Why don't you search for older forum threads instead of creating a new one.
To be honest, I don't think that the Bitcoin price could rise in times of economic stagnation and monetary restrictions. It's historically proven that the Bitcoin price rises in times when "money machine goes brrrr....". Maybe the upcoming crisis will be more like stagflation rather than a classic recession/depression, so the central banks will keep pumping money in order to save the economy. In that case, Bitcoin could potentially serve as safe heaven. On the other hand, I don't think that Bitcoin could dethrone the classic safe heaven-gold. BTC is still more risky and volatile than gold.

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Quote from: mk4 on August 15, 2023, 07:28:36 PM

It can, but it doesn't necessarily mean that it will. There's this hope that when an actual economic crisis comes, that people would realize the importance of bitcoin. But there's also an argument to be made that the next few years might be a bit too early for bitcoin to reach the masses.

Well I believe that in terms of increasing in price it will continue to do so as the cycles progress and that, although the returns will not be those of the former, the evolution of Bitcoin in fiat terms will far outstrip inflation.

What I don't see is why it should reach the masses. The masses will be reached by CBDCs and for Bitcoin to succeed as a store of value, as it already is, you don't need everyone to use it. It would simply be enough for less than half of the people who buy gold as an investment to use it, because you have to think that gold can be used as jewelry, while Bitcoin cannot. And as limited as it is, I think it is not so much a question of how many people want it as how much money the big players are willing to spend to get it.

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Quote from: kripto_corumlu on August 15, 2023, 06:18:07 PM

there's a lot of discussion about an impending economic crisis. I'm curious about how Bitcoin will perform during this crisis. Will it function as a safe haven similar to gold? Or will its value decline significantly?

what do you think ?

If we consider the Covid-19 pandemic is a real test for considering any asset as a source of value and therefore it is good for diversifying the investment portfolio, or does Bitcoin perform as any other investment asset and therefore it is bad for diversifying the investment portfolio?

To have a constructive discussion, base your findings on this scientific paper called Cryptocurrencies, Diversification and the COVID-19 Pandemic by David E. Allen.

You can see the research methodology and details of the results and their analysis but I will quote:

Quote

The results of the tests of the measures of association between the returns on the S&P500 Index and the returns on these two cryptocurrencies, Bitcoin and Ethereum, in the the pre- and post-COVID-19 periods all tell a similar story, regardless of linear and parametric measures, or non-linear and non-parametric measures being adopted.

In the pre-COVID-19 period, the regression analysis suggests that there is a significant positive association between the two cryptocurrency returns series but no significant relationship with the S&P500 Index returns. Kendall’s tau tests of correlation provide a similar set of results. The results change in the post-COVID-19 period, and whilst the relationship between the two cryptocurrency returns series remains positive and significant, there is now a positive and significant relationship between the returns on both cryptocurrency returns series and the returns on the S&P500 Index. Kendall’s tau metric also suggests significant and positive relationships between all three series.

cryptocurrencies in the form of Bitcoin and Etheureum do not provide a strong potential portfolio diversification tool, at least in the context of this particular crisis. This result is consistent with the findings of Massoumi and Wu (2021); Kristoufek (2020); Conlon et al. (2020); Lahmiri and Bekiros (2020); Grobys (2021).

Based on it, we can say that Bitcoin (in its current state) is not the asset that can be considered a safe haven or to diversify investment and risks when global crises occur, but this thing may change in the future.

mk4

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Quote from: bbc.reporter on August 15, 2023, 08:22:01 PM

@mk4. However, bitcoin's correlation with the more traditional markets has been going down. If this continues after every bull and bear markets, we might witness bitcoin being considered by traditional finance as an alternative investment for hedging. The interest on a spot ETF for bitcoin is clearly a sign of this. I shake my head to the doubters.

The falling correlation has been noticed since July.

Bitcoin's (BTC) fortune is no longer tied to sentiment in the U.S. stock markets.
The 90-day rolling correlation of changes in bitcoin's spot price to changes in Wall Street's tech-heavy equity index, Nasdaq, and the broader index, S&P 500, has declined to near zero. That's the lowest in two years, according to data tracked by crypto derivatives analytics firm Block Scholes.

The dwindling correlation with traditional risk assets means that crypto traders focusing solely on traditional market sentiment and macroeconomic developments may face disappointment.

Source https://www.coindesk.com/markets/2023/07/05/bitcoin-is-no-longer-correlated-to-us-stocks/

I couldn't count how many times bitcoin has correlated and de-correlated from traditional markets since the past. Who's to say it can't correlate sometimes soon again? I wouldn't make investment decisions based on this personally.

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