As Bitcoin crested the $8,000 mark recently, many investors seem poised to once again look to the cryptocurrency as a potentially viable alternative to traditional safe havens like gold and bonds.
Bitcoin is currently trading at roughly $8,084 on Friday, up 3.16% in the past 24 hours, according to Coinmarketcap.com.
Bitcoin has generally been regarded as risky, explained Dan Held, co-founder of Interchange, a company that advises businesses on how to manage their crypto assets. But he noted that the currency’s renewed vigor might be the first indication that it holds weight as a “risk off” trade, an investment treated as a safer bet when markets are tumultuous. Notably, Bitcoin catapulted higher in value Monday when the Dow plunged 617 points, perhaps indicating that investors turned to bitcoin as a safe haven asset.
“It’s bitcoin’s moment to shine when people momentarily give up on the government or the banking system,” Held added.
Apart from renewed interest when stock market prices are flagging, BItcoin has been showing signs of more spirited interest since the start of 2019.
“When the market started to rise, it drew more people in,” explained James Putra, head of product strategy at brokerage firm TradeStation Crypto. “Larger players started to take bites out of the marketplace; it’s a common and familiar approach.”
Still, it’s hard to shake off the fact that the cryptocurrency has been here before. After rallying to a high of roughly $20,000 in 2017, based on investors jumping on the bandwagon and trying to get rich quickly, the bubble finally burst, sinking the cryptocurrency to less than $4000 within just a year’s time. Since the bitcoin boom in 2017, the world’s largest cryptocurrency has dropped more than 60% from its high.