Cryptocurrencies Are Not a Safe-Haven Asset, Says Expert

Cryptocurrencies haven’t been used as a protected haven amid challenges the worldwide financial system has confronted at first of the yr, one professional says.

The world has already seen a slew of market-shaking occasions this yr together with commerce coverage uncertainty, geopolitical tensions and the coronavirus epidemic, amongst others. With traders all over the world struggling to seek out protected haven belongings to insure themselves towards potential crises, it was anticipated that many would flip to Bitcoin (BTC) and different digital currencies.

Doubts of crypto’s capabilities

Nonetheless, some business specialists say that digital currencies have didn’t function a protected haven. In a current interview with Cointelegraph, Campbell Harvey, a professor of worldwide enterprise at Duke College, mentioned that individuals worth cryptocurrencies for transactional functions and hypothesis.

“While you begin speaking about protected haven, it turns into actually troublesome to assume are these actually safe-haven belongings as a result of it is simply not apparent,” Harvey mentioned, suggesting that a lot of the worth that’s attributed to cryptocurrencies is actually speculative.

Elaborating additional on the matter, Harvey referred to a main sell-off within the inventory market when the costs on consecutive days dropped by 3%, including:

“Now, if these cryptos have been protected havens, then you definately would anticipate possibly no change of their worth or possibly even a rise in worth. However that is positively not what we have seen. The cryptos acquired battered and dropped by greater than 10%. So that means to me, in a specific state of affairs of nice stress the place persons are realizing that there is systemic danger unfolding, the inventory market drops as anticipated, individuals flee to protected belongings, however they did not flee to cryptos, they fled to the U.S. 10-year bond.”

“We’re already in a recession”

Harvey went on to talk about the inverted yield curve, which, in line with him, precedes recessions. He instructed that the recession might be very extreme, with individuals de-risking their portfolios by liquidating a number of the cryptocurrencies within the face of the present coronavirus risk:

“We have been already in a slowing development state of affairs and already headed for what could be a gentle recession or simply a slowdown. So given what we have seen when it comes to in lots of cities, many international locations the place financial exercise is mainly stopped. So it could possibly be that we’re already in a recession.”

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