In recent months, due to intensifying currency wars and rising geopolitical risks, high-profile investors in the likes of Michael Novogratz and Travis Kling have emphasized the importance of bitcoin as a potential safe-haven asset in the midst of global market turmoil.
In key markets including China and South Korea, bitcoin has been trading with a slight discount, which may indicate that investors are still favoring traditional safe-havens such as gold for because of the discrepancy in market capitalization.
Analysts foresee strength for bitcoin in medium to long-term, short-term remains unclear
Analysts foresee BTC outperforming many traditional assets in the medium to long term and a Goldman Sachs analyst stated that BTC has a short-term target at $13,971, establishing an optimistic sentiment around the asset class.
What is more surprising: that Goldman Sachs has a bullish target on $BTC, that they have any target at all, or that they use Elliott Wave Theory?
I’m personally most surprised they cant be bothered to use a chart that includes weekend price action. pic.twitter.com/ocpq7hr0qv
— Su Zhu 🦁 (@zhusu) August 12, 2019
However, according to BKCM CEO Brian Kelly, bitcoin needs to see growth in unique addresses proportionally to its price movement to ensure that the asset demonstrates a consistent inflow of capital from both retail and institutional investors. Kelly stated:
“What concerns me about bitcoin right now is we’re not seeing the address growth. The reason why I look at that is because that is fundamental. That is new money coming into it. We really need to see that address growth. What’s been going on, bitcoin’s been trading right with gold for the first time since I started talking about it in 2013. Macro players and other investors are actually using bitcoin as a currency hedge. So that is starting to happen and that is pure speculation so we need real buyers to come in.”
— CNBC’s Fast Money (@CNBCFastMoney) August 12, 2019
Various data sets such as the majority of Tether’s onchain volume coming from China and the rise in the inflow of capital from institutional investors via regulated investment vehicle operators like Grayscale Investments indicate that investors are at least considering the possibility of bitcoin operating as an alternative store of value that sees independent price movements unaffected by the global economy over the long run.
If investors continue to seek out for alternative stores of value other than bonds and precious metals, former Wall Street portfolio manager Travis Kling noted that bitcoin, as the leader of the SoV use case, is likely to prosper. He said:
“To be clear, BTC is far away the leader in the SoV use case. There’s only a few other cryptos that could even be argued for consideration of comparison, and their cases are all overmatched.”
Possibility of bitcoin acting as an alternative store of value
Whether bitcoin can sustain its upward momentum having already risen by nearly three-fold since March remains unclear as analysts question the strength of the fundamental factors of BTC at the current juncture of the market.
Kelly stated that the acknowledgment of BTC as a potential safe-haven asset may allow its momentum to extend throughout 2019, describing currency wars as an ideal catalyst for bitcoin. Kelly added:
“This is the perfect storm for bitcoin. You have multiple currencies around the world breaking down at the same time that institutional investors are actually embracing this asset class.”
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