With a 21% increase in value this month, Bitcoin has emerged as a secure refuge amid the current financial crisis and market downturn. Bitcoin has cut its ties with conventional equities and bonds and is rising alongside gold, achieving one portion of its creator's ideal that Bitcoin can be a haven for investors in trying times. While the S&P 500 has lost 1.4% and gold has gained 8%, Bitcoin has severed its ties with traditional stocks and bonds and is rising alongside gold.
Amid the current banking meltdown and market recession, Bitcoin is increasingly becoming a safe haven, with a 21% rise in value this month. While the S&P 500 has lost 1.4% and gold has gained 8%, Bitcoin has severed its ties with traditional stocks and bonds and is rallying alongside gold, fulfilling one part of its creator's dream - that Bitcoin can be a refuge for investors in times of suffering.
Bitcoin is showing to be a great investment, according to Stéphane Ouellette, CEO of the digital asset investment platform FRNT Financial, in a setting where central banks are trying to combat inflation with swift rate rises, which is leading to a series of bank runs.
Over the past week, the association between Bitcoin and the S&P 500 dropped to a negative 0.12, showing that the two commodities are not moving in unison. As the financial problem continues to destroy hundreds of billions of dollars worth of market value, Bitcoin is being considered as a possible substitute.
However, not all digital assets have been immune to the banking fallout, as the number two stablecoin, Circle USD or USDC, lost its 1:1 peg to the dollar after revealing that its reserves were parked at the shuttered Silicon Valley Bank. This has caused concern over USDC's ability to maintain its peg, with its market cap falling from $43.8 billion to $36.8 billion last Friday, while the leading stablecoin Tether gained around $4 billion.
According to market participants, some USDC withdrawals were likely reinvested in Bitcoin, fueling its rally. While Ed Hindi, Chief Investment Officer at Tyr Capital in Geneva, is cautious in saying that Bitcoin has proven to be an alternative in a banking crisis, he believes that the current rally in Bitcoin will be looked back at as a point in time when its main property as a decentralized non-sovereign asset was stress-tested.
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