The conventional and cryptocurrency markets were annihilated on May 5. Bitcoin (BTC) plummeted more than 7% in the worst trading day since 2020, while the NASDAQ lost more than 5%.
Many anticipated for a sell-off in the trading and cryptocurrency markets, and while Bitcoin’s near-term future appears bleak, one analyst and certain statistics indicate that Bitcoin is still on its road to being a risk-free asset.
The markets are not infallible or based on logic, but a risk-free asset is one that performs well or that investors flock to when general market sentiment is low.
Government bonds are considered risk-free investments, but technology stocks and cryptocurrencies are considered hazardous investments. Risk assets do well when the market’s overall “mood” is positive and the US Federal Reserve does not raise interest rates.
However, a Bloomberg analyst posted an intriguing graphic illustrating Bitcoin’s “acceptance, maturation, and domination over stocks,” hinting that Bitcoin may now be revealing its true colours as a safe haven amid difficult waters.
Mike McGlone stated that “the cryptocurrency market in early May seems like a fledgling revolution in financial technology and money.”
Bitcoin eventually established itself as a store of value, or Gold 2.0, as the Winkelvoss twins put it. However, in the face of a deteriorating macroeconomic background, prominent YouTuber Benjamin Cowen predicts that Bitcoin will not hit $100,000 this year in the present “risk-free” climate “unless inflation is under control.”