As the Stock Market Melts Down, Investors Eye a New Safe-Haven Asset
World stock markets melt down due to a combination of global social instability, the resurgence of COVID-19 and technical market instability, investors are eyeing a new safe-haven asset. Bitcoin's time has come, and this will be a test of its perceived status as "digital gold".
The DJIA fell almost 1,700 point on Wednesday, as investors reacted to news that the Federal Reserve might not support the stock market bubble, continued protests and civil strife and resurgent COVID-19 infections.
Bitcoin was born out of financial strife during the Great Recession of 2008. It was the reaction to widespread financial centralization that led to fraud and collapse. It has never seen a financial crisis before, and has benefitted from 10-years of economic growth.
Bitcoin dropped to $9,300 as it rejected the $10,000 resistance level on Tuesday night. This has been a tough technical and psychological resistance.
A savy investor can hedge their investment risk by holding cash, precious metals and a diversified portfolio of cryptocurrencies. This is a major test for cryptocurrency, and this will make or break their status as a perceived safe-haven asset class. If Bitcoin passes, this could provide an organic catalyst for its growth, holdings in institutional investment portfolios and price.
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Also published in my Sapien account under the name JustinTime.
Image from Pixabay.