Buying the Nasdaq represents a risk-on move and I’d argue so does buying bitcoin, a currency that can see swings of over $100 in a few hours.
A look at bitcoin’s trading pattern versus gold in the last year also gives a glimpse into how the cryptocurrency isn’t really a safe haven asset. Gold saw a lot of support between mid-June of 2016 and the middle of October. Bitcoin was just bubbling along quietly. But once President Donald Trump was elected, investors moved out of gold into riskier assets on the promise that increased spending by the new U.S administration as well as tax reform could boost stocks. At the time the gold price continued to decline, bitcoin rose, and while the precious metal saw a bit of renewed support in the first few months, the cryptocurrency continues to skyrocket.
It’s clear that investors are flocking to bitcoin, not because it offers stability, which it quite clearly doesn’t, but more to find solid returns on an asset that is up over 150 percent year-to-date.
Investors still believing bitcoin is a safe-haven asset might find themselves on the wrong side of the trade.
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