Why is Bitcoin falling when it’s a safe haven?

Bitcoin has had some troubles in the past few days. It was down 18.15% on September 19, but at press time there were some signs of a slight rebound. While the market appears to have lost the bullish momentum from early September, the decline in recent days has surprised the community.

But not only the crypto industry, the stock market is also grappling with similar difficulties.

Many people think that global financial markets could be affected by the risk of Evergrande China default. So what is Bitcoin, especially if it’s still struggling to be the top store of value?

Does Bitcoin act as a risk investment?

Source: Arcane Research

Although Bitcoin has been touted as a safe haven by many Bitcoin maximalists, Bitcoin and the entire crypto industry have seen a decline in value amid growing macroeconomic risks.

A similar result was seen in the past few days, when Bitcoin correlated more strongly with major energy and technology stocks.

Source: Skew

In addition, data from Skew shows Bitcoin’s correlation with the S&P 500 has hit a new 1-month high of 57%, beating the previous high of this year. On the contrary, gold has done very well in the past week.

Gold acts as a necessary “safe haven” and retains its value in a general market downturn. In fact, it actually rose slightly by 0.52% over the same period.

Is gold a better store of value?

Gold has “never” lost its Store of Value (SoV) status, but the argument has always been that Bitcoin is slowly becoming something better. At the moment, Bitcoin’s characteristics as a risky asset suggest that it is still developing intrinsic value. And, to be fair, the comparison was made temporarily.

Amid the global market turmoil, Bitcoin continues to experience greater volatility simply because it has reached a distribution tied to gold and its large market cap.

Plus, the recent sell-off was mostly local. Hence, it is also possible that Bitcoin will recover faster, as it did in 2020.