21.07.2024

Travis Kling on Bitcoin as a Safe Haven Asset

Also in today’s episode, we look at newly published priorities from the SEC around crypto including investor suitability, trading practices and compliance program effectiveness.

We also discuss former Bakkt CEO and now U.S. Senator Kelly Loeffler’s appointment to the committee that oversees the CFTC. Is it a conflict of interest, something good for the crypto industry or both?

The conversation about whether bitcoin is a safe haven asset continues in the wake of Iranian missile strikes, which saw the price of BTC both surge and retrace in parallel with crude and gold. To help explain what’s going on, we feature comments from Ikigai Asset Management’s Travis Kling.

Bitcoin as a safe haven asset as it follows crude and gold after Iran missile strikes.

SEC publishes 2020 crypto priorities.

Kelly Loefller appointed to committee overseeing CFTC.

Bitcoin Price Will Be Golden in 2020 Thanks to Limited Supply, Increasing Use: Bloomberg Report

Increasing global uncertainties and a weak dollar will likely push more investors into bitcoin as it becomes recognized as a store of value. The cryptocurrency’s fixed supply will further drive price increases throughout the year, Bloomberg analysts predict.

Bloomberg’s 2020 crypto outlook report, published Monday, predicts bitcoin’s price could move to the top of its 2019 range and retest the $14,000 high at a time when a weak dollar and stock market volatility continue and geopolitical tensions increase.

«Bitcoin’s initial reaction to the Jan. 3 U.S. airstrike that killed one of Iran’s most powerful generals was a good test of our premise that the first-born crypto is maturing toward a digital version of gold,» reads the report. Bitcoin jumped to a seven-week high Wednesday as gold rallied to $1,600 for the first time since 2013.

Bitcoin has long been seen as «digital gold,» in part because it is a limited asset that cannot be easily increased to meet changing demand, much like the yellow metal. The halving event expected later this year will reduce block rewards from 12.5 to 6.25 BTC, further adding to supply pressures should demand continue to grow.

Bitcoin’s supply is projected to grow by about 2.5 percent in 2020, which would be an all-time low. That’s partly due to the halving of the block reward – from 12.5 to 6.25 BTC. Supply in 2021 could well fall below 2 percent, analysts say.

Increasing investment in bitcoin could take many forms, believe the analysts. The rapidly expanding derivatives market – a sign of integration into mainstream markets – will better enable institutional investors to gain exposure to the asset class. That could have knock-on effects on price and decreasing volatility, thereby reinforcing bitcoin’s status as a store of value.

Not everyone is convinced bitcoin and gold share such a strong bond. Mati Greenspan, founder of Quantum Economics, which specializes in cryptocurrencies and foreign exchange, called such a relationship «weak» and noted the correlation between the two assets was negative until recently.

Bitcoin has also been prone to periods of short, sharp volatility. The asset surged up above $10,000 after President Xi of China called for his country to accelerate its adoption of blockchain technology before retracing its former range weeks later. For some analysts, that volatility fundamentally undermines the case for bitcoin being a stable store of value, at least for the time being.

But while bitcoin may still be too volatile for many people’s liking, it appears investors in the asset class are increasingly valuing digital assets that can maintain some sort of stable price. The Bloomberg report predicts that tether’s market cap will likely continue expanding this year, with many alternative cryptocurrencies struggling to keep investors as supply outstrips demand.

«Bitcoin should again outshine most crypto assets in 2020 as the unique and appreciating digital version of gold,» the report continues. «Bitcoin is winning the adoption race, notably as a store of value in an environment that favors independent quasi-currencies.»

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