Bitcoin has been on an absolute tear over the past week. According to analytics site Coin360, the asset is up around 22% in the past seven days. As of the time of writing this article, the flagship cryptocurrency sits snug at around $11,700 — down $2,300 from the year-to-date top, but $2,600 up from the monthly bottom.
Many say that this rally, which has propelled BTC from $3,150 to the local peak of $14,000, was catalyzed by uncertain macroeconomic and geopolitical trends. Or in other words, many believe that the recent surge in the Bitcoin price is a result of a growing number of investors searching for a safe haven or a store of wealth.
Indeed. As countless analysts on Twitter have pointed out, Bitcoin’s trend clearly coincides with similar moves in the value of the Swiss Franc, Japanese Yen, and gold. These three assets, of course, have historically been used as safe havens in trying economic times.
Not a Store of Value Play
But according to a recent Reuters article, this may not be the case. Speaking to the business news outlet, Marcus Swanepoel, CEO of London-based cryptocurrency platform Luno, explained that Bitcoin’s recent swings to the upside aren’t majorly a byproduct of its safe-haven characteristics, like its scarce nature or decentralized/non-sovereign protocol.
Instead, Swanepoel opines, BTC’s move higher has much to do with its ability to provide investors with outsized gains.
Forex.com analyst Fawad Razaqzada continued this narrative. Firstly, he stated that the correlations that have been seen between, say, Bitcoin and gold are nothing more than short-term trends, and are thus not indicative of BTC’s long-term potential as a hedge against certain risks.
Secondly, he explained that the fact that the crypto industry is so rife to hacks and heists, as made clear by the seemingly endless stream of exchange debacles, Bitcoin’s status as digital gold is undermined.
Crypto Pundits Beg to Differ
Others would beg to differ, as would the statistics.
According to Jeremy Allaire, who appeared on CNBC’s now seemingly crypto-centric “Squawk Box” segment, this rally has much to do with what is going on in terms of turmoil on the geopolitical stage. He stated:
“You can very clearly see some macro correlation there. I think the broader theme of, you know, Bitcoin specifically, crypto more broadly participating in these global macro forces is becoming more and more clear.”