Safe-haven assets are especially important in times of uncertainty when markets turn volatile. For example, if you live in a country that has high inflation rates, you want to protect your funds by investing in assets that are considered a good store of value. With that in mind, a lot of investors are looking for the right safe-haven assets for their portfolios. If you’re wondering what safe-haven assets and Bitcoin have in common, keep reading.
What is Safe Haven Asset
Safe-haven assets are defined as assets or types of investments that don’t depreciate in value, or in other words, they retain their value during times of economic crises or market volatility. Some assets even experience an increase in their value in times of economic turbulence. With that being said, investors that want to mitigate their risks during this time diversify their portfolios by investing in safe-haven assets.
Examples of Safe Haven Asset
There are different safe-haven assets that are not all equal, but generally, when we talk about these assets, we think about investments in gold, government bonds, precious stones, to name a few. Gold is typically seen as the best-performing safe-haven asset in economic difficulties because it isn’t influenced by decisions made by a government.
Bitcoin today is also treated as a safe-haven asset, even though it has a volatile nature, due to two main reasons. First, Bitcoin is a deflationary cryptocurrency. In fact, it was created as a response to the distrust in financial institutions due to the global financial crisis in 2008. Hence this is truly a decentralized cryptocurrency (even its founder is unknown and has disappeared in 2011), which remains unaffected by any significant political or financial event. The supply of Bitcoin is regulated by Bitcoin protocols, and the currency operates on a peer-to-peer blockchain network.
If you also want to invest in BTC, the good news is that a lot of reliable exchange rates were launched after its initial release in 2009. One great exchange website is https://the-bitcoinpro.com/. This is an automated trading website that uses Artificial Intelligence technology in order to ensure consistent results for its members.
On the trading site, you can make a deposit of $250 and earn up to $1250 in just less than eight hours of trading here. Another reason why this is a popular exchange platform is that it has a professional, friendly customer support team that is accessible 24 hours, seven days a week.
Performance of Bitcoin
The best way to ensure you’re making the right decision when you’re investing in a certain safe-haven asset is to compare their performance over a specific period of time. For instance, during the financial crisis in 2008, gold was one of the assets that were increasing in value while other assets like bonds were not performing as well.
Today, as you’re probably aware, Bitcoin is in the spotlight because its bull cycle is in full force since 2020. More specifically, the price of Bitcoin was exponentially rising during 2020 and 2021. It started off around $9.500 after the halving in May; by the end of 2020, its price has increased by 224%. In December, Bitcoin had reached $20,000; while from January to February, its price had doubled and hit over $40,000, by March, it made another record when it exceeded $60,000.
So, this is one good metric that you can use when you’re comparing different assets that you want to include in your portfolio. Plus, Bitcoin is a valuable asset because it is a very rare digital currency. Satoshi Nakamoto, who is the inventor of Bitcoin has fixed the supply of BTC at 21 million, and over 85% of the total supply is currently circulating in the market, or 18 million BTC.