Although bitcoin’s performance over the past two years has been nothing short of spectacular, the latest analysis suggests that the world’s largest cryptocurrency has failed to attract safe-haven flows.
This was evident in the case of increased demand for such assets following the escalation of conflict in the Middle East, according to Kaiko.
Bitcoin Struggles to Achieve Safe Haven Status
While gold and the US dollar rallied, the value of bitcoin fell 6% in April. A potential reason for this could be the Bitcoin halving, which typically leads to short-term volatility.
However, BTC’s performance after major market events, such as the US banking crisis and Russia’s invasion of Ukraine, indicates that other factors come into play. During these two events, the Bitcoin saw a notable rise in value but remained unchanged after the Hamas attack on Israel.
Kaiko’s report also highlighted that BTC’s performance varies widely against different fiat currencies, with massive gains against currencies like the Turkish Lira, Argentine Peso, and Nigerian Naira, compared to smaller gains against currencies like the Turkish Lira, Argentine Peso and Nigerian Naira. against the US dollar.
With geopolitical tensions escalating, energy prices rising and divergent monetary policies, currency volatility could increase in the coming months.
US Treasuries disappoint investors amid market turmoil
In recent years, the global economy has faced major turbulence, including the COVID-19 pandemic and resulting supply chain disruptions, leading to inflation reaching levels not seen in decades. Central banks, including the Federal Reserve, have aggressively raised interest rates to counter this situation.
Amid these economic uncertainties, bitcoin surged almost 1,000%. In doing so, it outperformed traditional safe-haven assets such as gold and US Treasuries.
While gold has seen a modest 33% increase over the same period, the same cannot be said for US Treasuries, which are down 12% since March 2020.
This trend challenges the conventional wisdom that gold and Treasuries could thrive in times of market turmoil. This suggests a growing argument that bitcoin is becoming the ultimate safe haven despite its notorious volatility.
Even though BTC has seen significant declines in the past, its long-term trajectory shows substantial growth, improving the purchasing power of its holders, according to some market commentators. Its decentralized nature and limited supply of 21 million coins make it an attractive hedge against economic uncertainty.
