Despite this, it is important to emphasize that Bitcoin and cryptocurrencies are assets that appreciate in the long term, which is not enough to become a haven asset, given that in the short term they are subject to shocks that strongly impact their value. price.
This was evidenced on Thursday, February 24, where after Russia’s attack on Ukraine, the crypto market capitalization fell to 1.6 billion dollars, a drop that represents 7% to later recover up to 3%. This translated into the fall of the main cryptocurrencies, far exceeding, in some cases, 15%.
Bitcoin would have shown reliability as an investment asset and good value to combat inflation. But, due to the current uncertainties, the cryptocurrency is seen as high volatility. Which makes it difficult to think that Bitcoin or other cryptos can act as a refuge value today.
What do you need in the future to become a store of value?
In the first place, Bitcoin needs to reach a capitalization like the one that gold has today, that is, 13 billion dollars, and for this it needs to grow by at least 500 thousand dollars in its Bitcoin price to achieve such liquidity so that these market shocks do not impact its price.
World markets and indices have reacted to the start of the Russian-Ukrainian conflict. Sharp falls have been seen, while safe-haven values have been reflected in gold, energy commodities such as oil and natural gas futures and government debt.
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We must continue to observe how the fall in the price of crypto acts. We are yet to see prices drop to as low as $29,000-$30,000 like last year following the crackdown on Bitcoin mining in China.
As a financial asset, it will not be the first time, or the last, where the cryptocurrency will be exposed. As has already been seen with the 2017 crisis with the Chinese ban, in 2020 with the global pandemic, and in 2021 with the Chinese mining ban for crypto assets.
CEO of LatAmTech Finance.
Source: Ambito
