Crypto enthusiasts say a “paradigm shift” could bolster Bitcoin’s status as a safe haven asset, as the cryptocurrency gains ground in the fallout of the latest banking crisis. Following the collapse of Silicon Valley Bank and Signature Bank, as well as the sale of Swiss banking giant Credit Suisse to its rival UBS on Sunday, the world’s first and largest cryptocurrency has reached its highest level since June last year. At the time of writing, Bitcoin was up 17% in the past week according to data from CoinGecko, with a price tag of $28,121. The rally has in part been attributed to expectations that the U.S. Federal Reserve may slow, if not end outright, its interest rate rises in response to the banking industry’s woes. This would in turn increase investor risk appetite, which tends to benefit risk-on assets like crypto.
But some crypto commentators have sought to frame Bitcoin’s ascent as something driven by investors hedging against risk. Caitlin Long, founder and CEO of Custodia Bank, said in an appearance on CNBC that the banking crises had “orange-pilled” people, a term for new investors getting into Bitcoin, amid what she described as a “paradigm shift” in traditional banking.
The recent crisis has again raised hopes that Bitcoin could act as a “safe-haven” asset, a type of investment that attracts people who want to protect their wealth from turbulent markets. Gold, Treasury bills, and certain currencies can all be seen as safe havens.
ARK Invest’s crypto lead Yassine Elmandrja said yesterday in a newsletter co-authored with the fund’s founder Cathie Wood that crypto has the potential to offer an alternative to classic banking. CoinShares analyst James Butterfill told Decrypt yesterday that Bitcoin “hasn’t stopped being one, it’s just that safe-haven assets are usually interest rate sensitive, and as the Fed looks to be backing off from its highly aggressive interest rate hikes, Bitcoin, like gold, is outperforming.”
Kaiko’s director of research Clara Medalie told Decrypt that Bitcoin and gold had both benefited from the global banking turmoil, helping the correlation to hit its highest levels since January. She added that an increase in long-term Bitcoin holders also indicates that the lead cryptocurrency may indeed be serving some investors as a store of value.
The recent banking crisis has again raised the possibility that Bitcoin could act as a safe haven asset, a type of investment that attracts people who want to protect their wealth from turbulent markets. Crypto commentators are saying that Bitcoin’s ascent is being driven by investors hedging against risk and that a “paradigm shift” in traditional banking is causing more people to invest in Bitcoin. Data from CoinGecko indicates that Bitcoin is up 17% in the past week and the correlation between Bitcoin and gold has hit its highest levels since January. #Bitcoin #Crypto #SafeHaven #BankingCrisis #ParadigmShift
You can read more about this topic here: Decrypt: Crypto Enthusiasts Rush to Promote Bitcoin’s ‘Safe Haven’ Status Amid Banking Crisis