Over the past seven days, Bitcoin is up 10.50%, following a string of significant gains throughout the week. Notably, the largest crypto asset rose 7% on Monday following the emergence of fake news about the approval of the BlackRock iShares Bitcoin Spot ETF.
As expected, this price gain provoked a plethora of reactions from various crypto enthusiasts and analysts.
In particular, Larry Fink, the CEO of BlackRock, declared in an interview with Fox Business that BTC’s rise was partly due to the fake news about the spot ETF’s approval, but also to a growing demand for a safe haven for investments.
According to Fink, rising geopolitical tensions – citing the ongoing Israeli-Palestinian conflict – have created uncertainties that are driving investors to traditional assets such as gold, as well as crypto assets.
BlackRock’s CEO describes this trend as a ‘flight to quality’.
Dissecting the Bitcoin ‘Flight To Quality’ Theory
Will Bitcoin Benefit from a ‘Flight to Quality’?
As US bonds face a historic sell-off, with 10-year yields hitting a 16-year high of 5%, investors are looking for alternative assets.
Long-term bonds have plunged 20% in six months and are down 53% since March 2020.
— IntoTheBlock (@intotheblock) October 20, 2023
Following Larry Fink’s statement earlier this week, blockchain analytics and research firm IntoTheBlock has now published a report evaluating the viability of Bitcoin as a ‘flight to quality’.
In the message on Friday, IntoTheBlock highlighted several factors that supported Fink’s claim. First, the analytics firm said U.S. bonds are experiencing a historic sell-off as 10-year long-term bond yields topped 5% this week.
In general, US bonds are considered one of the safest forms of investment. However, such developments are usually described as negative. This is because an increase in bond yields leads to a decrease in demand for existing, lower-yielding bonds and in turn to the devaluation of these bonds.
As expected, these rising bond yields have resulted in a 20% depreciation of US long-term bonds over the past six months. Meanwhile, there has been a significant 53% decline in the value of these investment assets since March 2020.
Bitcoin registers less volatility than US government bonds
Furthermore, IntoTheBlock highlighted that Bitcoin’s volatility is currently lower than that of these US long-term bonds, indicating that it offers a higher level of stability to traditional investors looking at the value of their investment.
Finally, the research firm pointed to Bitcoin’s remarkable performance during this bond market crash, comparing it to the asset’s positive price movement during the series of US bank failures earlier in 2023.
The blockchain research firm noted that the crypto market leader is already on par with gold with a 7% gain in October and is gaining greater recognition as a favorable alternative investment asset by several Wall Street financial experts.
Taking into account all the factors mentioned above, IntoTheBlock states that there are increasing signs that Bitcoin is becoming a safe haven for traditional investors and could largely benefit from a ‘Flight to Quality’ movement, especially with the possible launch of spot Bitcoin ETF.
At the time of writing, Bitcoin acts at $29,667 with a loss of 0.27% on the last day. At the same time, the token’s daily trading volume has fallen by 18.70% and is currently valued at $15.86 billion.
BTC trading at $29,661 on the hourly chart | Source: BTCUSDT chart on Tradingview.com
Featured image from iStock, chart from Tradingview
