Will bitcoin become a safe haven when the world falters?

Bitcoin is receiving a lot of attention from investors in the tense global political situation.

According to CNBC, the tense situation between Ukraine and Russia is making the financial market generally volatile.

Additionally, the US Federal Reserve is expected to hike interest rates by 0.5% next March in response to high inflation due to the impact of Covid-19.

These developments prompted many investors to find safe haven channels to hedge assets. Bitcoin is beginning to be viewed as one such channel.

More profitable than shares

For the past few months, bitcoin has traded like stocks. Although this cryptocurrency is risky, it is still considered a “stock” with good growth.

Currently, BTC is showing signs of recovery from its massive drop earlier this year. Additionally, the fact that tech stocks are in a sharp downtrend is also a reason investors are beginning to turn to other risky assets.

Bitcoin is traded similar to stocks. Photo: Kiplinger.

“Bitcoin is compared by some to a stateless currency. Practice has proven that it works well enough even in the face of geopolitical tensions in the past. Therefore, we expect Bitcoin to become a safe haven soon,” said Yuya Hasegawa, an analyst at exchange Bitbank.

However, Mr. Hasegawa also commented that Bitcoin hasn’t really made investors believe because the US stock market is in a negative streak.

“Against the volatile US stock market, Bitcoin has also become very fragile and unpredictable. Therefore, I think Bitcoin investors will remain cautious until the situation on the Russian-Ukrainian border calms down,” added Yuya Hasegawa.

In the first week of February, shares in the technology industrial group in the USA fell sharply. At one point, Meta Platforms, which owns Facebook, lost as much as 26% of its value, which is more than that 200 billion dollars business in just one day. It was also the biggest drop ever for a US company.

As such, Bitcoin, as well as a number of other cryptocurrencies, are being viewed by investors as a potential haven. However, the current geopolitical situation remains tense and it is difficult to predict the next movements in the financial markets.

Bitcoin can continue to “hibernate”

According to data from Coin Metrics, at one point bitcoin price is down about 38% from its all-time high set in November 2021. Currently, bitcoin price has yet to recover near its peak.

Even as tech stocks and economic growth falter, analysts say Bitcoin could continue its “crypto winter.” Moreover, this situation is likely to persist in the coming months.

Bitcoin will likely continue to “hibernate” for the next several months. Photo: CNBC.

The term “winter” in the crypto space first appeared in late 2017, referring to a period of bleak, negative, and consecutive bearish trends. At this point, the price of bitcoin quickly slipped only as much as 80% $3,000 before the massive investor sell-off.

“If we were in a bear market, prices would fall for eight or nine straight months. It will quickly drive scalpers out of the market. On the contrary, real players will continue to invest in this technology,” said Chris King, CEO and founder of Eaglebrook Advisors.

Also, according to the analysis of Katie Stockton, founder of Fairlead Strategies, Bitcoin’s resistance level will hold 46,730 USD and probably won’t go any higher this week. If the market shows negative signs, Bitcoin probably bottoming out 37,360 USD and are supported from this interval.

Areas where the blockchain can break through

At a time when Bitcoin returns are inconclusive, other forms of investment such as NFT, Metaverse, or DeFi play a big role in attracting newbies. Basically, the larger the number of participants, the more impressive the market development.

“Investment cases are increasing. We’re just beginning to get a taste of how the blockchain sector works,” said Rodrigo Vicuna, CFO of digital asset services company Prime Trust.

Applications in the blockchain space can benefit each other. Photo: Euronews.

In 2021, NFT emerges and explodes with a slew of deals up to million dollars. NFT is slowly proving that blockchain applications have greater potential than meets the eye. However, most people still see them as digital art and are more “entertainment” than a profitable investment.

According to Chris King, founder of Eaglebrook Advisors, the gains in the blockchain space are pretty impressive and can attract a lot of newcomers.

“The most important thing is that we have to observe and look at the application both in the short term and in the long term. It’s really important. The hype surrounding these assets and the rapidly increasing prices mean that more and more users are joining,” said Chris King.

Also, according to Mr. King, DeFi or decentralized finance also needs more time to prove its potential. Furthermore, the blockchain sector is still evolving and also plays a huge role in driving the value of coins up.

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