Bitcoin, the largest digital asset by market value, is enjoying an impressive start to 2020 and some crypto market observers believe the digital currency is acting as a safe-haven amid fears of the spreading of the deadly coronavirus.
Bitcoin, which generally leads the way for other cryptocurrencies, could make move higher into year-end if it can stay above some key technical levels this week, which is good news for futures traders and soon-to-be options traders of the crypto.
“The ongoing upward trajectory of the price of Bitcoin correlates to the spread of the coronavirus,” said deVere Group CEO and founder George Prior in a note out Monday. “The more individual cases that are identified, the more countries around the world that are affected, and the greater the impact on traditional financial markets, the higher the price of Bitcoin has jumped.”
A New Safe-Haven?
Bitcoin, the largest digital currency by market capitalization, has its share of critics and supporters. Integral to the case of expanded acceptance and use of the digital asset is conveying to investors that bitcoin has a store of value properties, whether it be by measuring intrinsic or monetary value.
Bitcoin’s historical volatility trends, which have ebbed somewhat, have often prevented some market observers from calling the digital asset a safe-haven on par with gold, but the coronavirus headlines could be prompting some investors to revisit that thesis.
“In this regard, we can expect Bitcoin’s price is likely to continue to rise until the coronavirus peaks which, according to a prestigious research group in Hong Kong, is likely to be in late April or early May,” said Green.
There is an increasing global acceptance that cryptocurrencies, such as Bitcoin, are not only the future of money but increase the money of today. As is the case with gold, there’s also an element of scarcity associated with Bitcoin.
“Bitcoin, known as ‘digital gold’, shares characteristics of the traditional yellow metal including being a store of value, scarce, being perceived as being resistant to inflation, and a hedge against turmoil in traditional markets – many of which have been pushed in a tailspin since the coronavirus outbreak,” according to Green. “Whilst coronavirus and geopolitical tensions have certainly been underscoring the reputation of decentralized, non-sovereign, secure currencies, such as Bitcoin, as safe-havens, they are somewhat peripheral drivers for why cryptocurrencies are now regarded as the future of money.”