Crypto-currency is quickly transitioning towards a reclassification as a safe haven asset. Up until a week ago this seemed unlikely. Crypto had been highly correlated with equities and their recent price crash from the Coronavirus outbreak. Recently, however, their price action has taken a completely separate path. Of course it's a bit preemptive to declare their longstanding correlation over, but I think BTC is actually the best safe haven asset the world has right now.
If you are following the equities markets and the marketplace in general, things are getting very ugly. The drop from ATH we have seen in the S&P500 vastly outpaces any previous price drop on stock markets, even including the great depression. Percentage-wise, the S&P500 has dropped 30 percent in a month. Oil is down over 60% in that same time frame. Airlines, Hotels, Restaurants, Bars, Cafes are all rapidly moving towards bankruptcy.
Other industries are taking a beating as well. Almost nobody has been spared, aside from Amazon, grocery stores, and a handful of other companies which are well-situated for this economic environment. Soon, workers will be laid off across the board, if not already. Unemployment will spike sharply to levels unimaginable just 2 months ago. Many people are already jumping past the "recession" word and straight to "depression".
There is a very real chance that the world's banks and markets will be stress-tested in a way they never have been before. Governments simply can't afford to bail everyone out. Many businesses will need to fail. This will eventually put great pressures on the banks, and anyone who has provided loans to these failing companies. For the first time in our lifetimes, we are truly at risk of activating our FDIC insurance. Banks could begin failing and cascading downwards.
It used to be that Gold was the defense against this type of event. But gold has changed. Most people who hold Gold are holding it in ETF's, in third party safes, or a safety deposit box. All of these are feasibly at risk in cascading bankruptcies. The logistics involved in getting access to your bullion are cumbersome and in many cases infeasible. Travel has basically halted. Businesses are closing their doors, if not permanently then temporarily. They will not unlock them to give you your bullion.
Bitcoin, and crypto-currency in general, is the one asset you truly can control from anywhere. It has no physical location. It cannot be repossessed by a failing government. It can be transferred without permission from any other party. In the case of a bank collapse, this is the asset that the world will truly desire. Ask me six months ago and I'd say the fiat system is sound. That it would not be at risk in our lifetimes. This black swan event has completely changed the world dynamic, and the economy is simply not designed to handle this type of stress. Hold onto your Bitcoin folks.
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