Some crypto advocates have argued Bitcoin can be a good safe haven for investors when other markets get stormy. Unlike national currencies, Bitcoin is not linked to any government or national economy. There’s also an eventual cap on its supply. Crypto fans say that gives it an intrinsic value similar to precious metals like gold, Reuters has noted. Bitcoin has also shown an inverse correlation to stocks in the past, according the news outlet.
There are grounds to question the safe-haven thesis after the last week, though. Bitcoin tumbled about 15%, Bloomberg reported Friday morning. That’s its worst five-day slide since November. Other cryptocurrencies were faring better, but only slightly. A Bloomberg index that tracks other large digital currencies in addition to Bitcoin was down about 12%, its worst performance in four weeks.
“People thought at certain points in the last year or so that cryptocurrencies would become the flight to safety trade,” Matt Maley, an equity strategist at Miller Tabak + Co. was quoted saying. “The cryptocurrency is losing some of that luster of being considered a safe asset.”
This week certainly would appear to qualify as a good test for an asset’s safe-haven bona fides. There was a market meltdown in Argentina, escalating trade tensions between the U.S. and China, inversion of the Treasury yield curve (viewed as a recession indicator), grim economic news from Germany, and anti-government protests in Hong Kong.
Of course, some of Bitcoin’s losses this week likely stemmed from crypto-specific news: The SEC has again delayed a decision on two ETFs tracking Bitcoin.