Bitcoin has touched upon $8400 after the Iranian Missile Attack.  This is the new high of 2020.  The token touched $8,438 before retracing slightly.

The token trended upwards from $8,080 to $8,400 and further until $8,438 before it retraced to $8,400. Following the Iranian tensions, traders are reallocating their capital to safe-haven assets like gold and oil.  They are liquidating their money from riskier assets.

Bitcoin As Prospective Safe Haven

BTC is now establishing and sustaining its position as a leading safe-haven asset in the cryptocurrency market admist geopolitical tensions. 

There is a growing demand in the Fixed Income Exchange-Traded Funds (ETFs).  This provided for the largest inflow of investors in the year 2019.  There was a minor outflow in the fourth quarter of 2019.  There is a massive growth and demand and Bitcoin hopefully would find a share in it.

The fixed income ETF is particularly built around bonds and other kinds of fixed assets.  These funds provide for a hedge versus the economic dangers involved in the market. 

For instance, in the US, the overall economic condition has been good and bullish; however, 2019 shifted the whole situation towards fear.  The fear was trigged by the geopolitical tensions mounting between US, China, Iran and several other authoritative bodies.  Investors are seeking protection against loss.  The bonds provide for capital protection while facilitating guaranteed returns on investment.

The overall market is in a confusion of what the future holds.  The bonds are relatively safe.  The investments are helpful.  Bonds provide lower returns when compared to the open equities markets.  Bonds also protection versus dramatic changes in the market.

The fixed-income ETFs provides for general concerns about the market being highly volatile. In turn for safety, investors are willing to take lower returns.

There is a high potential for market loss due to fiscal policies which are poor.  The risk aversion among investors is increasing and they are looking for better investment channels.

Bitcoin as Safe Haven is a Fallacy

While the bitcoin bulls would like to claim that Bitcoin is the real gold, there are counter theories.

Oanda’s Craig Erlam stated, “These people ignore all the times that it moves inversely with sentiment.” He further added, “Bitcoin is not gold and certainly not gold 2.0.”

Craig agrees to the fact that the cryptocurrency has rallied since Friday; however, he opines that there has not been any extraordinary move and states that it is trending in the ranges. He also stated that when comparing Bitcoin and Gold charts, they are inversely proportional.

The analyst concluded stating, “The evidence isn’t there, and fundamentally, it’s too volatile and unpredictable to even be considered.”