Bitcoin (BTC) remains a safe asset despite its massive price drop over the past week. At least, according to digital asset research firm Bloqport. Bitcoin's inability to retain value as other assets declined has raised doubts about claims that it is a safe asset.
Bitcoin price drop raises concern
The drastic nature and speed of last week's price drop caused even some of the top cryptocurrency champions to doubt Bitcoin's resilience in future market collapses and economic recessions.
Experts expressed concern that there was a strong correlation between bitcoin and other risky asset price movements last week. This could indicate to investors that cryptocurrencies cannot be relied upon to resist future market pressures, which is a key indicator for safe haven assets.
However, Bloqport may have removed these fears through a recent tweet comparing Bitcoin's recent behavior to Gold's performance during the 2008 financial crisis.
Bloqport noted that Gold also had a massive 30% drop during the last global economic crisis. The asset fell from approximately $ 1,000 to $ 700, indicating that it was not a safe asset during the crisis.
Gold was not a safe haven during the 2008 crisis.
It crashed -30% ($ 1K to $ 700). Only in 2009 it began its rise to $ 1200.
Safe-haven assets are bought up AFTER markets bottom.
If a recession happens, watch how Bitcoin reacts thereafter, not during.
Bitcoin’s price will soar.
– Bloqport (@Bloqport) March 14, 2020
Look what happens next
Bloqport added yet another twist to the furious debate over the state of Bitcoin's safe haven assets by stating that what happens next is of greater importance.
According to the crypto analyst, investors buy safe haven assets after the markets crash. Case in point, the rise in the price of gold began in 2009 when the economic slowdown was narrowing. As such, they expect bitcoin's price to skyrocket when the current coronavirus-driven economic crisis subsides.
These observations will provide much-needed relief to the crypto community and long-term bitcoin investors.
The huge price movements on the Gold chart also show that volatility is not exclusive to bitcoin and cryptocurrencies. Critics have repeatedly cited Bitcoin's wild price movements as the reason to exclude the cryptocurrency from its portfolio. Despite continually defying the odds and asserting its claim as a viable asset, this narrative has persisted. Now, this narrative appears prominently in claims that discount bitcoin's safe haven status.
The current economic crisis is a huge test for Bitcoin
Bitcoin continues to prove that many people are wrong and continues to manifest its capabilities amid endless controversy. The digital asset has passed multiple tests in the past and has repeatedly silenced its critics.
Now bitcoin faces its biggest test yet. To demonstrate that it is truly a safe haven asset.
The current economic crisis is a watershed moment that raises tough questions for the digital asset. If you answer correctly and retain your value, you will surely affirm your status as a safe asset.
Following its recent behavior reflecting that of gold in a past crisis, I would bet that bitcoin's resistance will demonstrate why it is viewed as digital gold.