Thursday was a real bloodbath for the traditional and cryptocurrency markets. In the worst trading day since 2020, Bitcoin (BTC) fell more than 7%, while the Nasdaq plunged more than 5%.
Many expected a capitulation in cryptocurrency trading and markets, and while the short-term outlook for bitcoin looks dim, one analyst and some evidence would suggest that bitcoin is still on its way to becoming a risky asset.
The markets are by no means mathematical or infallible, but a risk-free asset describes an asset that performs well – or is an asset investors flock to – when general market sentiment declines.
Government bonds are zero risk assets. Conversely, technology stocks and cryptocurrencies are considered risky assets. Risk assets perform well when the overall market “mood” is positive and when the US Federal Reserve does not raise interest rates.
However, a Bloomberg analyst shared an interesting chart outlining “bitcoin adoption, maturation and outperforming equities”, implying that bitcoin may finally be showing its colors as a safe haven during rough waters.
The chart shows that Bitcoin’s volatility and performance are outperforming that of the Nasdaq 100 stock index.
Crucially, Mike McGlone explained that “the cryptocurrency market in early May appears as a nascent revolution in fintech and money.”
“The fact that the world’s most seamless 24/7 trading vehicle, bitcoin, is down just 15% in 2022 as of May 3 vs. the Nasdaq 100 stock index’s 20% may herald the transition of cryptocurrencies into a commodity asset. risk”.
Mike McGlone, the author of the report, was interviewed with Cointelegraph in January of this year. McGlone suggested that Bitcoin’s transition to becoming a risky asset “will propel it to $100,000 in 2022.”
Crucially, he described that “what is happening to advance money and finance in the 21st century is unstoppable.”
To back up the argument, according to a chart provided by InvestAnswers YouTube, over the past 90 days, Bitcoin is up 6% vs. Nasdaq’s low of 12%.
Ultimately, Bitcoin has slowly proven itself as a store of value, or Gold 2.0, as the Winkelvoss twins describe it. However, with the macroeconomic backdrop worsening, popular YouTuber Benjamin Cowen said bitcoin may not hit $100,000 this year in the current “risk-off” environment, not “until inflation is under control.”
Consequently, It may still be a bit prescient to call bitcoin a “risky” asset, especially as it stalls in the mid-$30,000s.
That said, there are a couple of certainties. Do Kwon will continue to buy Bitcoin by the billions, Michael Saylor will continue with the big orange pill investors, and there will only be 21 million bitcoin.
Clarification: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
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