Bitcoin can become a major hedge against financial crisis

Digital asset management company Grayscale Investments has published a regular report , which examined the influence of factors such as the US-China trade war and the devaluation of the yuan on the prices of cryptocurrencies .

Analysts found that the steady growth of Bitcoin showed during the economic difficulties of the traditional finance industry. For example, simultaneously with the emergence of concerns about Brexit from June to December 2016, Bitcoin grew by 7.1%. During the same period, the euro fell by 2.4%, the pound – by 8.1%, and the MSCI World Price index – by 4.9%.

Similarly, to the accompaniment of fears, because of the possibility of an economic crisis in China, from August 2015 to December 2016, Bitcoin rose by 53.6%, while the yuan fell by 5.7%, and the MSCI emerging market index – by 22%.

“Although Bitcoin (BTC) as an investment asset is still at a very early stage of its development, we found confirmation of the opinion that it can serve as a hedge in the global liquidity crisis, which, in particular, will be reflected in the depreciation of national currencies ,” writes Grayscale .

Well-known analyst Peter Schiff has repeatedly stated that in the scenarios described by Grayscale, people would rather hedge risks with the help of gold rather than bitcoin.

“Bitcoin is trying to pretend to be gold, but I think it's fool's gold. Bitcoin has no value, the accumulation of which it could become. When you accumulate bitcoins, you don’t accumulate anything , ”he said.

Schiff also criticized Grayscale for her Drop Gold campaign, in which the asset manager offered investors to abandon gold in favor of a more advanced alternative – Bitcoin. The analyst considers the action aimed at promoting cryptocurrency that does not have an intrinsic value as a ridiculous farce.

However, Grayscale continues to insist that cryptocurrencies are a viable financial technology and investment asset. In addition, according to the company, Bitcoin has the characteristics that allow it to spend, which is not the case with gold, and serves as an example of using the blockchain technology in real conditions, as well as a decentralized digital asset.

“Bitcoin continues to spread and is a transparent, immutable and global form of liquidity, which can serve both the accumulation of wealth and the realization of growth opportunities. Thus, we believe that Bitcoin should be present in a variety of long-term investment portfolios as a strategic position , ”concludes Grayscale.

Publication date 15.06.2019
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