Is Bitcoin The New Safe Haven Trade?

Bitcoin and the entire crypto space has caught a solid bid this morning, pushing the cryptocurrency back over $7,000 without any apparent catalyst or major news behind the move.

However, according to Andrew Zatlin of Moneyball Economics, one possible explanation is emerging as likely: Bitcoin is becoming the new safe trade.

As Zatlin explains, echoing what we first said in September 2015, emerging markets are continuously using bitcoin (BTC) as a way to get their money of their respective countries.

Crypto currencies are attractive to individuals in less developed economies for a few reasons:

  • Transaction costs are the same as gold.  BTC's higher price volatility is offset by gold's higher conversion fees
  • Liquidity favors BTC
  • BTC only requires access to the internet
  • Easier to transport and hide $20,000 of BTC offsets gold's bulkiness

As recent events in Turkey and Iran show, hard currency and precious metal confiscation is a very real threat.  Crypto is now a very real alternative.

Turkish citizens flocked to bitcoin as the Turkish lira continues to plummet. The lira is down nearly 40% this year alone. An insane drop for a currency.

In dollar terms, gold continues to trade lower as bitcoin catches a bid.

Here's a chart of bitcoin demand from within Venezuela

The Emerging Markets can be grouped into two categories: those that are adopting BTC and those that are panic buying.  Russia is an example of a late adopter.

Examples of panic buying: Argentina, Chile, Columbia, Hungary, India, Mexico, Peru, Philippines, Russia, Venezuela.

Here's Chile:

Here's Columbia:

Here's Hungary:

Here's India:

Here's Mexico:

Here's Peru:

And here's the Philippines:

One signal coming from BTC: indication of underlying economic/capital strength.

It's still a bit too early to assign a definitive value for regional BTC demand. But the fact that millions of people around the world are flocking to bitcoin is a sure sign there is a value of it.