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Financial crisis of 2008 proves: Bitcoin as a safe haven not yet failed

  • The Bitcoin price could currently be in a phase of decoupling from the stock market, similar to the development of gold in the global financial crisis of 2008.
  • Analogue to the S&P500 / Gold charts of 2008, the peak of fear may have been reached whereby Bitcoin could establish itself as a safe haven in the coming weeks.

Contrary to the mainstream media headlines that Bitcoin did not pass the test as a safe haven, there are good arguments to stick to the narrative of Bitcoin as digital gold. As Binance CEO, Changpeng Zhao, also emphasized yesterday that the truth is nuanced. No one can expect Bitcoin to rise when the Dow Jones index crashes, or Bitcoin to crash when the Dow rises. In particular, the influence of the coronavirus as the trigger of the whole crisis cannot be ignored.

Regardless of this, the well-known analyst Willy Woo has already observed a first step in the decoupling of Bitcoin from the stock market. To this end, Woo compared the development of the S&P500 and the gold price during the global economic crisis of 2008 with the current development of the S&P500, gold and Bitcoin. As can be seen in Woo’s chart, the gold price also initially fell in 2008 in line with the stock market.

s&p500 bitcoin gold

Source: https://twitter.com/woonomic/status/1241974852791095296/photo/1

During the financial crisis of 2008, traders massively exited risky positions and hedged their assets in fiat currencies (USD, EUR, etc.). Not until the initial panic in the market subsided and the peak of fear was passed, did the gold price begin to decouple from the stock market. As the chart shows, the gold price initially moved downwards in 2008 in line with the stock market.

This was followed by a phase of decoupling, in which the gold price showed a slight upward trend and freed itself from its dependence on the stock market, before the price rose massively. Gold and Bitcoin could currently be at the beginning of this phase, as Woo derived from his chart on Twitter:

Decoupling of safe havens from equities showing hints it may have begun (i.e. when BTC and Gold go bullish). We’ll have more confirmation in a week.

[…] After peak fear, best assets for hedging the times ahead rise in value (Gold 2008, Gold & BTC 2020)

Bitcoin price shows further momentum

After the Bitcoin price suffered another setback last Friday, March 20, falling from around USD 7,000 to temporarily USD 5,700, BTC is currently showing strong momentum again. Within the past 24 hours the price has climbed from 5,800 USD to 6,600 USD. Bitcoin thus defied the predictions of some analysts that the support of USD 5,400 would not last.

Interestingly, gold and silver prices also rose by around 3.9% and 2.7% respectively in the last 5 days. The S&P500, on the other hand, saw a further drop of 2.9% yesterday and 10.9% over last week, which may confirm Woo’s thesis. Market participants who have recently exited their equity positions may now begin to look for shelter in gold, silver and Bitcoin. However, as Woo also noted, the next few weeks still have to confirm his thesis conclusively.

At the time of writing, BTC was trading at just under USD 6,600, up 11.1% in the past 24 hours.

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About Author

Jake Simmons

Jake Simmons has been a crypto enthusiast since 2016, and since hearing about Bitcoin and blockchain technology, he's been involved with the subject every day. Beyond cryptocurrencies, Jake studied computer science and worked for 2 years for a startup in the blockchain sector. At CNF he is responsible for technical issues. His goal is to make the world aware of cryptocurrencies in a simple and understandable way.

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