Bitcoin Safe-Haven Status Undermined
|Bitcoin continued to consolidate within a descending triangle pattern in early trading on Thursday. Price fell as low as $9,502 before rebounding above the key psychological level of 10K.
After rallying while U.S. equities sank earlier in August, some analysts pointed to Bitcoin as an emerging safe-haven asset, highly correlated with escalating U.S./China trade war tensions. However, more recently the world’s largest cryptocurrency by market cap has traded lower along with equity markets. Meanwhile, traditional safe haven assets such as the Japanese Yen, the Swiss Franc and gold remained firm.
News of Facebook’s Libra cryptocurrency was a major force supporting Bitcoin’s rally in 2019. However, increasing regulatory scrutiny has put pressure on Libra and in turn Bitcoin. Most recently, data protection officials in the US, EU, UK, Australia and Canada have voiced fears over the “privacy risks” of Libra.
In July U.S. President Donald Trump, tweeted his beliefs about Bitcoin;
"I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity...."
U.S. Treasury secretary Steven Mnuchin added to the negative commentary, warning that cryptocurrencies pose a "national security" risk to the United States. Additionally, the IRS began to crack down in July by sending letters to 10,000 U.S. citizens who own cryptocurrencies that it thinks have failed to pay the appropriate taxes.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.