Bitcoin confirms its safe haven status

On January 1, 2020, some were talking about a potential future economic crisis, but there was no indication that it had occurred so quickly. The coronavirus has changed the game and was the trigger for this crisis.

Using the Bitcoin price as of January 1, 2020 seems to me to be a coherent idea to validate or invalidate its safe haven status.

At that date, Bitcoin had an average price of around $7,200.

Tensions between Iran and the United States contributed to the beginning of a price increase which was then prolonged by the prospect of the Bitcoin Halving of May 2020. On February 9, 2020, the price of Bitcoin rose above $10K for the first time since June 2019.

In early March 2020, the price of Bitcoin ranged between $8,500 and $9,000.

And then we witnessed what is now called Bitcoin’s Black Thursday on March 12, 2020. In the midst of the liquidity crisis that hit every liquid market in the world, Bitcoin price collapsed to a low of $3.8K on some trading platforms on March 13, 2020.

After Bitcoin’s Black Thursday, many then questioned Bitcoin’s safe haven status without even realizing that in the midst of a liquidity crisis, all liquid assets are under attack.

The fact that gold lost more than 10% in the following days put many people back in their place on this issue.

The HODLERS of last resort once again showed their unshakeable confidence in Bitcoin as they took the opportunity to strengthen their positions. This allowed to Bitcoin price to rebound strongly and the price was already back to around $6,500 just a week after Black Thursday.

As of April 24, 2020, the price of Bitcoin is $7.5K. Since the beginning of the year, in spite of the economic crisis hitting the world, Bitcoin has posted a positive performance of +5%:

Bitcoin price has risen by 5% year to date

Over the same period, the Dow Jones lost nearly 20%, and the S&P 500 did not fare much better with a performance of nearly -15%. As for WTI crude oil, it even saw its price turn negative on Monday, April 20, 2020 in a day that will forever make history.

In a world where everything is turning upside down, it would seem that Bitcoin is one of the few certainties we can have.

In the realm of certainties, there is also gold, which, after a few days of being in the midst of the liquidity crisis of March 2020, has recovered well like Bitcoin.

Since January 1, 2020, gold has seen its price increase by 15% to cross the $1,700 mark again recently:

Gold price has risen by 15% year to date

Gold reconfirms, if still necessary, its status as a safe haven in times of crisis. Nevertheless, gold has far too many drawbacks compared to Bitcoin.

Bitcoin is objectively superior to the gold in many ways: greater divisibility, durability, portability, recognizability, and much scarcer.

At the level of the Bitcoin network itself, it is good to note that despite the liquidity crisis of March 2020 and the economic crisis that is starting, the level of security remains extremely high.

In the midst of the liquidity crisis that we experienced during the month of March 2020, while the Hash Rate dropped slightly for a few days, the overall trend is still bullish :

Hash Rate continues to rise globally

Bitcoin’s current Hash Rate is once again approaching the historical record that the network experienced on March 8, 2020.

Bitcoin is still the most secure decentralized network in the world.

In the midst of an economic crisis, Bitcoin is therefore resisting, as any safe haven should. Even better, Bitcoin is attracting more and more users who are disillusioned with the current monetary and financial system.

The large number of US citizens who have used their stimulus check of $1,200 to buy Bitcoin is a clear proof of this.