Is owning bitcoin as safe as owning bonds and gold?

If you’ve been observing the cryptocurrency markets over the past few months, you will most likely feel the urge to buy Bitcoin. Being a traditional investor, or simply an observer of the price action, you may feel somewhat uncomfortable with the fluctuations and violent swings. The fact is, Bitcoin is the best performing asset of the decade, but it is also the one that stresses out investors the most.

In this article, we will compare Bitcoin to more traditional assets in terms of safety, performance, and long-term viability, in the context of the market developments that occurred in the past months.
Volatility as a feature
The narrative around bitcoin is very similar for every new investor that discovers it. They first seem curious, then they are taken aback when looking at the charts. Sure, it may have the potential to grow in value, but no one could possibly stomach the 20-30% price swings that occur on a daily basis.

In some way, it’s understandable. In contrast to the bond market and the price action of precious metal, Bitcoin seems to be much “wilder”. The volatility that occurs in the market is a natural result of a new asset being in price discovery.

Michael Saylor, CEO of Microstrategy and avid Bitcoin investor says it best: “Bitcoin’s volatility is a feature. It shows that the market is alive. If it wasn’t volatile it (bitcoin) would be dead”.

Another Bitcoin pioneer, Max Keiser, tends to agree. “The only fish that goes with the stream is the dead fish” he says in the Orange Pill podcast, one of the most popular Bitcoin news channels in the industry.

So, this volatility of Bitcoin does not mean that there is any lack of safety. You only lose money once you decide to sell your coins, and impatient sales are usually a result of undeveloped emotional intelligence. The latest is the result of too little understanding of Bitcoin’s fundamentals and a limited scope of the macroeconomic conditions that we find ourselves in. In short, those who sell can’t seem to look further than Bitcoin’s profit potential.
Bonds and gold
The bond market, as well as gold, are both heavily manipulated by hedge funds going short on them. The same can be said about the stock market. Any digital product that can be traded in derivative markets is automatically falling victim to the direction that large corporates want it to go.

Gold has been growing over the past few years, but it is still in line with the inflation rates that occur to the US dollar on an annual basis. The same with the bond market. Experts of financial markets see no bright future in any of them, even though gold could temporarily increase in price as a response to the COVID19 circumstances.

The perceived safety that these assets provide is nothing more than increased popularity, trust from governmental institutions, and the slow but steady growth in their price. This doesn’t necessarily mean that they are safe; it just means that the risk you run into for short-term price movements is decreased since the direction of the market is not purely determined by investors’ supply vs demand.
Bitcoin is the safest option available
Safety should be measured in an asset’s potential to protect the individual’s wealth, and eliminate any third parties that try to control it. And Bitcoin fits both criteria. Over its 11 year reign, the popular cryptocurrency has managed to outperform any other traditional investment opportunity thanks to its decentralized nature, capped supply, and deflationary protocols.

As we are currently cruising a period of time where economic instability is at its peak, it is important to understand that people will try to find an “emergency exit” that will help them protect their wealth. And this is where everything becomes clear:
The bond market is controlled by third parties and pushed to remain stagnant.
The precious metals market (especially silver) has not experienced a growth in value due to the massive shorts that hedge funds place upon it. It is also a lot harder to buy up and store physical gold, making it less safe for those who wish to store it in their own home.
Bitcoin is purely digital, not controlled by any third party, and its price is determined purely by supply vs demand. The power of the internet, in other words, is responsible for the direction of its price, not Wall Street and governments.

Even if the latest were going to attempt to crush its value, the public now knows better. We are already aware of the billions of shorts on Bitcoin by hedge funds. We are already aware of potential limitations in FIAT onramps. And yet, the price of Bitcoin continues to increase and is projected to continue a positive growth curve within 2021.