As Pandemic Struck, Cryptocurrencies Failed A Key Test - The eCoin
Based on the behavior of Bitcoin and Ethereum during the Covid-19s Pandemic the author of this article comes to the conclusion that 'the long held theory that all cryptocurrencies are save havens' has been debunked. The analysis by the author ignores some crucial facts:
- During the hyperinflation and recession in Venezuela and Argentina, these countries experienced a wide spread adoption of some select cryptocurrencies.
- During initial periods of heavy recession all asset classes get sold down, including gold. For instance, during the period March 2008 to November 2008, gold prices saw a decline of $7831 per kg from $31,633 per kg to $23,802 per kg. Notwithstanding, gold has always been touted as a safe haven asset class. True to this claim, gold prices rallied in 2009.
- Unlike the established asset classes, the number of participants in cryptocurrencies are still small and a large chunk of the assets are still held by a select few investors. Any large movement of the assets by any one or more of these select few investors causes panic and a sell down. As the market matures and the assets get distributed to a larger base, this scenario will change and cryptocurrencies will start to behave more in line with other similar asset classes. Until then, any comparative analysis of the behavior of cryptocurrencies is bound to be incorrect.
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I personally feel that there is still not yet a crypto that is a real badger where greedy hands will not stick their oily fingers in for a quick profit through "causable short panic".
That being said, as long as people are not educated and crypto is not fully widely mass adopted (like gold for centuries) there is no way you can say it is a safe haven; maybe temporarily.