Bitcoin Emerges Safest-Haven For Assets, Debts Surges To $17 Trillion
Reports say that investors are considering Bitcoin as a safe-haven asset in the wake of mounting household debt. With a $525 billion market valuation, Bitcoin is currently the 12th largest asset in the world, just ahead of Visa and behind Tesla. Both institutional and retail investors are becoming more interested in digital currency, with 11.3% of retail investors and 7.8% of institutional investors designating Bitcoin as their favorite safe-haven asset, respectively.
According to a recent Bank of America poll, Bitcoin came in third place on the list of safe-haven assets, only behind cash and gold. This signifies a substantial change in how people regard Bitcoin, formerly considered a speculative asset with little basic worth. The cryptocurrency’s decentralized structure, constrained supply, and lack of governmental or central bank regulation all contribute to its growing popularity as a safe-haven asset.
This change in opinion is especially noteworthy in light of the current economic situation. Analysts says that the alarming $17 trillion mark for household debt in the U.S. is a historic high. This has forced investors to start looking for safe-haven investments that protects their capital in the case of a recession.
Bitcoin Proves It’s Worth As The Best Place To Save
It was said that the COVID-19 pandemic’s impact on Bitcoin’s performance has further solidified the cryptocurrency’s reputation as the safest place to save. Bitcoin’s price increased by nearly 400% in 2020, beating traditional safe-haven investments like gold and bonds, even as the epidemic brought about a global economic collapse.
This has caused a lot of investors to think of Bitcoin as a good substitute for conventional safe-haven investments. The correlation between Bitcoin and other assets shows how widely it is used, proving it is the safest place to save assets. Through May 2023, gold and the S&P 500 had a correlation value of 0.04, meaning they were not aware of each other other’s movements.
On the other hand, the correlation coefficient between Bitcoin and gold was 0.51 and showed a closer connection between the two assets. Investigation revealed that the federal funds rate is between 5.00% and 5.25%. This is evidence that the high lending rate has minimal effect on average American borrowing behavior.
Reports say that U.S. consumers have added an extra $860 billion to the cumulative mortgage balance since the Federal Reserve tightened the interest rate for the first time. Reports from several accounts say that the cumulative mortgage balance, in terms of credit card debt, now stands at $145 billion.
Automobile loads are at $93 billion, while student loans have accounted for $14 billion. Further investigations into past performance show that debt for credit cards was the only component measured that experienced little movement from the last days of 2022 and March 2023. It was also said that these sectors nearly hit $1 trillion, thereby hitting the highest point.
Investors And Stakeholders Reassures Their Confidence In Bitcoin
Due to Bitcoin’s limited supply and decentralized structure, cryptocurrencies are a desirable substitute for conventional assets like equities and bonds. The fact that Bitcoin is a digital asset also encourages its popularity as the world gets more digital.
Investigation into the market behavior reveals that stakeholders believe that Bitcoin continued to confront formidable obstacles despite becoming increasingly popular as the safest way of saving assets.
Also, due to its high level of volatility, some investors now see Bitcoin as a speculative investment rather than a safe asset. was also gathered that the decentralized nature of Bitcoin makes it challenging to govern, raising worries about its application in illegal activities like money laundering and terrorism financing.
Meanwhile, as at the time of this report, investors are increasingly looking for assets that might safeguard their wealth in the case of an economic downturn as household debt keeps rising, and economic uncertainty is still high. Even though Bitcoin still faces many obstacles, its rising reputation as a safe-haven asset may encourage adoption and help it reach new heights.
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