Nik Bhatia, the founder of The Bitcoin Layer and author of “Layered Money: From Gold and Dollars to Bitcoin and Central Bank Digital Currencies,” asserts that Bitcoin, despite being 15 years old, remains too immature to be considered a safe haven asset. In a CNBC interview published Tuesday, Bhatia highlighted Bitcoin’s perceived riskiness due to its relatively short history.
Bitcoin’s Risk Perception and Market Behavior
Bhatia pointed out that Bitcoin often mirrors stock market movements, fluctuating alongside equities. However, he also noted that Bitcoin has shown significant growth during certain periods when it diverged from the stock market. These instances, Bhatia believes, highlight Bitcoin’s potential as a hedge against excessive monetary and fiscal policies over the past decade.
The Challenges on Bitcoin’s Path to Becoming a Safe Haven
Bhatia emphasized that Bitcoin is striving to become a safe haven asset, one that can protect investors from inflationary effects stemming from aggressive monetary and fiscal policies. Nonetheless, he acknowledged that Bitcoin currently behaves more like a risk-on asset, which is why it has plummeted alongside global stocks this week.
A Bullish Outlook Despite Recent Declines
Bitcoin experienced a significant drop of over 10% on Monday, reflecting a broader market downturn, but showed some recovery on Tuesday. Over the past week, Bitcoin has fallen by 16%. Despite this downturn, Bhatia remains optimistic about Bitcoin’s future, citing the substantial influx of capital into the cryptocurrency market.
“Bitcoin historically tends to see 25% to 50% drawdowns in the middle of its bull markets,” Bhatia explained. “Although I understand, for a lot of holders right now, it can feel very scary.”
Bhatia’s perspective underscores the growing pains Bitcoin faces as it continues to evolve and seek its place as a potential safe haven asset.
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