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Abstract
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This study investigates whether Bitcoin can function as a safe-haven asset, a status traditionally associated with assets such as gold, U.S. Treasury securities, and major fiat currencies during periods of financial turmoil. As the leading cryptocurrency, Bitcoin is frequently likened to gold because of its finite supply and decentralized structure. Nevertheless, its pronounced price volatility and limited historical record cast doubt on its effectiveness as a reliable store of value in times of economic stress. The study adopts a quantitative research approach that integrates historical market data with investor survey responses. It analyzes Bitcoin’s price dynamics, its correlation with major equity indices, and its comparative performance against gold during episodes of financial distress. In addition, survey data offer valuable insights into investor perceptions and behavioral responses toward Bitcoin under conditions of heightened uncertainty. Initial results indicate that although Bitcoin exhibits some features commonly associated with traditional safe-haven assets—such as scarcity and independence from monetary authorities—its high volatility and speculative characteristics undermine its role as a stable hedge against market downturns. The findings suggest that Bitcoin may display safe-haven properties in certain circumstances, but it has not yet achieved the consistency required to supplant assets like gold. By contributing empirical evidence to the expanding literature on cryptocurrencies, this research enhances understanding of Bitcoin’s emerging position within contemporary financial systems and offers meaningful implications for both investors and policymakers. |
Keywords
Abstract
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This study investigates whether Bitcoin can function as a safe-haven asset, a status traditionally associated with assets such as gold, U.S. Treasury securities, and major fiat currencies during periods of financial turmoil. As the leading cryptocurrency, Bitcoin is frequently likened to gold because of its finite supply and decentralized structure. Nevertheless, its pronounced price volatility and limited historical record cast doubt on its effectiveness as a reliable store of value in times of economic stress. The study adopts a quantitative research approach that integrates historical market data with investor survey responses. It analyzes Bitcoin’s price dynamics, its correlation with major equity indices, and its comparative performance against gold during episodes of financial distress. In addition, survey data offer valuable insights into investor perceptions and behavioral responses toward Bitcoin under conditions of heightened uncertainty. Initial results indicate that although Bitcoin exhibits some features commonly associated with traditional safe-haven assets—such as scarcity and independence from monetary authorities—its high volatility and speculative characteristics undermine its role as a stable hedge against market downturns. The findings suggest that Bitcoin may display safe-haven properties in certain circumstances, but it has not yet achieved the consistency required to supplant assets like gold. By contributing empirical evidence to the expanding literature on cryptocurrencies, this research enhances understanding of Bitcoin’s emerging position within contemporary financial systems and offers meaningful implications for both investors and policymakers. |
