With the new crisis, bitcoin is confirming its status as a safe haven for crypto


While institutional investors are fleeing cryptocurrencies, small investors tend to fall back on the iconic bitcoin, No. 1 in terms of capitalization and with the longest survival history.

Bitcoin, digital gold? Since May 2022 and the collapse of the Terra Luna blockchain, the cryptocurrency market has been in turmoil. In this context, cryptocurrency investors seek refuge in what they consider to be the most secure, often bitcoin. Common point between it and gold, THE safe haven by definition: rarity. 21 million bitcoins, neither more nor less, will be created without any institution being able to change anything. This “unchangeable programmed policy” contributes to its success, according to Josselin Tonnellier, chief product officer for Stackinsat, which offers bitcoin-based financial products.

Of the 19.09 million bitcoins created, only 2.4 million are available on exchanges

However, Bitcoin has lost 47% of its value since the beginning of May 2022. We are therefore far from a safe investment or a gold rush … But according to Josselin Cooper, this sudden fall could be attributed to “large portfolios”. Mutual funds that speculate in price and hope to take advantage of leverage effects have massively relieved their bitcoins, considering them, like other assets, too risky. Then there are the cryptocurrencies damaged by the crisis, which resell their bitcoins in exchange for cash.

Individual investors, for their part, took advantage of the fall in the price to buy it. The number of users with more than 0.1 bitcoin, that is, on July 18, 2022, approximately $ 2,230, has never been so high: 3,706 million on July 12, 2022 against 3,177 on July 17, 2021, according to data collected by Glassnode, a increase of 17%, while the price of bitcoin simultaneously fell by almost 40%.

Acceleration in the number of bitcoin addresses by at least 0.1 bitcoin in recent weeks. © Glassnode

The purchase of bitcoins is a long-term investment that is characteristic of safe haven: According to the co-founder of Stackinsat, 23% of bitcoins have been stored for five years. Of the 19.096 million bitcoins created, only 2.4 million are available on exchanges, or 12% of the total volume. Most of the time bitcoin, treasures, hoards accumulate.

Competition

All around, there have never been so many cryptocurrencies: 13,400 in July 2022 against 4,500 in February 2021, according to Statista. Despite this wide range, bitcoin remains the preferred option for crypto investors: its capitalization is the largest on the crypto market with $ 425.810 million, on July 18, 2022, and its capitalization share in the crypto market total is 44%, again according to Statista.

Critics of bitcoin face the fact that it can not be a safe haven, as it has lost 71.3% of its value since November 2021, when it peaked (source: CoinGecko). But these data need to be put in context with the fluctuating cryptocurrency market. “Most cryptocurrencies have lost 90% of their value compared to their highest point,” says Josselin Tonnellier. Finally, when confidence in a cryptocurrency is shaken, the latter buys bitcoins to reassure investors.

Clearly, the comparison with gold stops at the frontier of the digital world: the capitalization of gold is estimated at between $ 10,000 and $ 11,000 billion. Bitcoin? about 2,870 times smaller. “It’s not heavy enough for the amount of money in the financial markets, it can not absorb billions a day,” notes Josselin Tonnellier. Dominant, reassuring, secure cryptocurrency, bitcoin is a safe haven … but only in the cryptocurrency world.

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