By CCN Markets: A debate has been raging about whether or not bitcoin should be deemed a safe-haven asset. After all, the leading cryptocurrency sure wasn’t behaving like one and investors sure weren’t doing a flight to safety in crypto while the equity markets were getting hammered this week. Even now, bitcoin is quietly holding onto $10,000 but not before having dipped below that key level in recent days.
Bitcoin bull and Fundstrat Co-Founder Thomas Lee is not the least bit spooked that investors didn’t flock to bitcoin while the stock market – rightfully or wrongfully – signaled a recession. Lee told Fox Business that bitcoin, in fact, is a safe-haven asset, pointing to the premium price paid for the leading cryptocurrency in “markets that are in turmoil.” Indeed, a Bloomberg report recently revealed that the bitcoin price was fetching premiums of 10 percent and 4 percent in Argentina and Hong Kong, respectively.
Hi @joanaGodinho it was great speaking with Stuart @Varneyco today on bitcoin, which we see as a macro hedge, and why we want to buy stocks here, especially given panic over inverted curves… #BTD#BTFD#invertedcurves https://t.co/eEp2qmCYc6
— Thomas Lee (@fundstrat) August 15, 2019
Defenders of bitcoin as a safe haven make the argument that you have look at the longer-term picture rather than the day-to-day action in the price. Fundstrat’s Lee, for example, notes that BTC has more than tripled since year-end 2018. Its uncorrelation to stocks and bonds makes it a good “diversification hedge.” Lee is also the one to recently remind us that BTC $10,000 is the FOMO level, but institutional investors seemingly have yet to come off of the sidelines.
Nonetheless, something about including “safe haven” and “bitcoin” in the same sentence seems off, given the unpredictable if not defiant nature in which the leading cryptocurrency trades. 2018 isn’t too far in the rearview mirror, after all. Besides, why else would crypto asset managers advise such a small allocation to BTC vs. other asset classes? A rare opportunity – definitely. But safe is a little tougher to swallow. This vintage 1999 Jeff Bezos/Amazon.com video that has gone viral on Reddit reminds us of the nascent days of the internet that are comparable to where crypto is today.
Bitcoin to the Moon
Fundstrat’s Lee is not out of the bitcoin price prediction business. After last year’s bullish call for BTC $25,000 didn’t work out, Lee backed off from making price forecasts for a while. With the wind seemingly at its back, bitcoin could make a strong finish in 2019 similar to its record display in 2017, and Lee doesn’t want to miss out. He tells Fox Business host Stuart Varney:
“I think it’s going to be much higher by the end of the year and potentially at new all-time highs. I think anyone who wants to have a 2 percent or 1 percent allocation to bitcoin as a hedge against a lot of things that could go wrong it’s a smart bet.”
BTC Isn’t Dead
So why hasn’t bitcoin risen to the occasion while equities are gasping for air? Lee suggested that the flagship cryptocurrency has been “resting,” which Fox Business host Stuart Varney found amusing and compared to the dead parrot Monty Python sketch.
Unlike the parrot, Lee noted, bitcoin isn’t dead.