- Bitcoin price surged to over $ 69,000 as U.S. inflation data showed its highest increase in 30 years
- The sharp decline that followed that day came as stocks reacted to the unexpected data
- Analysts say this suggests that Bitcoin is still risky as opposed to risk free
- However, mainstream adoption could make crypto a safe haven
Bitcoin’s surge to prices above $ 69,000 amid rising inflation concerns was further evidence that investors are increasingly viewing cryptocurrency as better inflation protection.
Alongside gold, Bitcoin hit highs of $ 69,044 on November 10th. At the time of writing, it remains bullish, with renewed momentum pushing it above the $ 66,000 level again. It’s a scenario where the cryptocurrency market’s perception of BTC as a better store of value is increasing day by day.
However, many finance and market experts are not convinced that Bitcoin is a better bet as a safe haven.
Adam Button, an analyst at ForexLive, says Bitcoin remains a risk-taking asset despite its recent rally on fears of inflation. He says the rally gave an indication of the growing status of flagship crypto as a hedge asset. However, the sudden drop in prices on the day it rose to its current ATH suggests otherwise.
“The high-inflation crypto rally is an indication of where it is headed as an asset class, but the sharp late-day decline underlines the boundaries. At the moment, Bitcoin is still a risky asset, ”he explained.
Another analyst, John Kicklighter, points out that Bitcoin’s sell-off is consistent with losses on the exchange, thus lowering the cryptocurrency’s claim to a risk-free asset.
Bitcoin’s high correlation with the stock markets and the high volatility that characterizes its trading is more appealing to investors looking for higher returns, rather than those looking to sit on the assets in a market dependent on increased economic spending.
According to Kicklighter, in times of heightened inflation, the retail market is keen on Bitcoin versus the dollar. The same doesn’t apply to institutional interests, however, which are unlikely to rotate in BTC if liquidity is behind the price spike.
Button adds that Bitcoin’s growing institutional appeal, despite the limitations, means that it is gaining acceptance.
“I think there is no doubt that that’s it [mainstream]. It has now crossed the threshold and will continue to prevail, ”added the analyst.
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