Recently, the rise in Bitcoins’ prices amidst nervousness in the market owing to the Coronavirus pandemic and the U.S. – Iranian tensions has renewed the debate regarding Bitcoin’s status as a safe-haven asset like gold.
The most recent crypto leader to add to the debate was Tyler Winklevoss, co-founder of cryptocurrency exchange Gemini along with his twin brother Cameron Winklevoss. Earlier today, the tech mogul of Facebook founding fame took to twitter to add his opinion to the debate:
At some point people will wake up and realize that bitcoin is the best safe haven asset the world has ever seen. Until then, opportunity abounds.
— Tyler Winklevoss (@tylerwinklevoss) February 27, 2020
Rekindling the Debate: Bitcoin as a Safe Haven?
Safe-haven assets can be defined as those whose prices rise when the stock markets fall due to increased risks. When faced with market agitation, investors tend to withdraw money from risky ventures and invest in ‘safe’ assets (like gold) for a more reliable store of value.
Since the beginning of the year, Bitcoin’s value soared, reaching over $10,400 at one point. This has rekindled the debate on the digital coin’s status as a safe-haven asset.
Several leaders in the crypto industry have come forward to present their own arguments regarding why they consider Bitcoin, and by extension, other cryptocurrencies, to be safe-haven assets that can be used to secure investments from the volatility and instability of the markets.
For example, the co-founder of Morgan Creek Digital, Anthony Pompliano, argued that Bitcoin’s value was independent of geopolitical uncertainty, making it a safe investment. He added that even as uncertainty pertaining to coronavirus negatively impacted the stock markets, Bitcoin was up by 30 percent year-to-date, outperforming gold.
Just teasing you 🙂
Bitcoin is up approximately 30% year-to-date while coronavirus and other uncertainty has raged on.
It literally has outperformed gold. Just math my friend!
— Pomp 🌪 (@APompliano) February 26, 2020
In the past week, however, Bitcoin’s price has fallen even amidst rising uncertainties. Consequently, crypto skeptics celebrated the validation of their theories regarding Bitcoin as a commodity rather than a store of value safe-haven asset.
For instance, in a 44-minute-long podcast broadcasted today, economist, financial broker, and gold promoter, Peter Schiff, presented a case for why Bitcoin was not a safe-haven asset but a highly risky investment.
The Winklevoss Twins on Bitcoin as Digital Gold
The Winklevoss twins have long maintained that they see Bitcoin as a safe value asset or digital gold. Last year, Tyler Winklevoss tweeted:
Bitcoin is gold 2.0. It matches or beats gold across the board. It’s market cap is ~140bil, gold’s market cap is ~7tril. Do the math!
— Tyler Winklevoss (@tylerwinklevoss) May 16, 2019
“If you have gold, start building up bitcoin reserves… We think Bitcoin will disrupt gold,” he said at the 2019 Crypto Finance Conference. “Once the likes of Tesla’s Elon Musk or Amazon’s Jeff Bezos start mining gold on asteroids, which will happen within 25 years, gold’s value will change,” Tyler added.
Both twins have frequently encouraged investors to buy bitcoin and the traditional financial industry to start building up Bitcoin reserves.
$17 trillion dollars are currently held in negative interest bonds. 17 trillion reasons why you should own bitcoin.
— Cameron Winklevoss (@winklevoss) October 17, 2019
They are not the only ones who see Bitcoin as digital gold either. For instance, Managing Director of Grayscale, Michael Sonnenshein, said at the Crypto Finance Conference, “While gold and bitcoin share many attributes, bitcoin outshines gold given that it is more divisible, portable and has greater utility… Bitcoin is digital gold and forward-thinking investors must pay attention to the shift away from antiquated ideas of gold serving as a store of value or inflation hedge in their portfolios.”