Can Bitcoin, which has an edge over gold, be a true safe haven?

According to AMBCrypto reported on February 29, as Bitcoin's downtrend expands into other markets, gold supporter Peter Schiff has begun to attack this digital asset again. Peter Schiff once again denied that Bitcoin's performance as a "safe-haven asset" and "value-storage means" is superior to gold, and his comments have become the focus of public attention.

golden-bitcoins-keyboard-metal-laptop-bank (Image source: pxfule )

With increasing selling pressure, Bitcoin has experienced a difficult week, and its price has once again returned to the level of more than 8,000 US dollars. Although Wall Street Journal trader PT Barmum may see the decline as a good "bottom-sweep" opportunity, Peter Schiff said:

Bitcoin has not been around long enough to prove PT Barmum's opinion. Too many fools I've met, many of them have Bitcoin.

Bitcoin's status as a safe-haven asset is once again questioned, and Arcane said in its latest blog that from the reaction to the instability of the global economy, Bitcoin is indeed not a safe-haven asset. Arcane Research CEO Torbjørn Bull Jenssen and analyst Bendik Norheim Schei stated in a recent post:

Bitcoin can be used as a safe-haven asset not because its price will rise when the global economy is unstable, but because it has two unique attributes.

The two went on to say that it is precisely because of its irrelevance to all other asset classes and its resistance to censorship that it has become a safe-haven asset.

A report shows that Bitcoin and gold have a positive return on investment this year, and gold's return to date has reached 11.51%, a new high of 7 years ago.

The chart below shows the difference between Bitcoin and the S & P 500 Index (S & P 500).

skew_bitcoin_vs_sp500-1

Image source: Skew

However, despite the continued growth of Bitcoin at the beginning of the year, its recent performance is in line with the stock market and is in a downward trend. The report states:

For many people, the so-called safe asset means that people will hold it when the stock market plummets and global turmoil. Or it is presented in another way, for example, it has a clear negative correlation with the stock market. When we look at Bitcoin as an asset, it is important to study whether it is negatively correlated or not correlated with other markets.

To classify an asset as a safe-haven asset, low correlation with traditional assets is not the only criterion. Other important criteria include liquidity, forfeiture, ability to resist censorship, and low credit risk.

Compared with most other assets, Bitcoin has almost no risk of confiscation and credit risk. There is no need to consider uncertain events when holding Bitcoin, that is, when you own physical Bitcoin, you will not face credit or confiscation risk.

Taking the 2008 economic crisis as an example, the researchers said that the flaws generated by the economic system during this period were exactly what made Bitcoin different. Users can buy Bitcoin without worrying about the uncertainty behind it. Despite some shortcomings, Bitcoin performs better than gold in many ways, for example, it can be used anywhere in the world, not just stored in the national vault. The researchers concluded:

The spread of fear of the global epidemic, the decline of the stock market, are irrelevant to the rise of Bitcoin price. The important thing is that Bitcoin can continuously provide anti-confiscation and censorship capabilities.At the same time, its liquidity is constantly increasing, and it has little relevance to other assets. This is the real safe-haven asset.