Bitcoin between two worlds: risk and safe haven

josevas217 (79)in PussFi 🐈 • yesterday

Hello PussFi friends, today I want to bring up a topic for discussion that I don't know if you'll agree with. But before taking a position, I suggest you read the post to the end and, after explaining my point, find out what you think about it.

It's no secret that large institutional capital is entering the crypto market, primarily thanks to Bitcoin ETFs. This has its pros and cons, as expected, but since we can't do anything about it, we just have to study and see how we can take advantage of market movements.

Although the most logical thing in the case of Bitcoin is definitely holding, right?

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But what I'd like to discuss in this post is whether or not we can consider Bitcoin a purely risky asset or if it already falls within the definition of a store of value. Let's start by defining what a risky asset is:

"It is a type of investment that carries a high degree of risk and volatility, such as stocks, high-yield bonds, commodities, and cryptocurrencies." ^Source

Now that we're clear on that, let's look at a definition of a store of value:

"A store of value is a characteristic of certain tangible assets or instruments that preserve their value over time, that is, they don't suffer sharp declines at times when others do." ^Source

_Fuente

There are some characteristics that stand out in this article that something we can consider a store of value must possess, and they are, for example, price stability (without being exposed to large fluctuations), its durability, i.e., it must not deteriorate over time, it must be secure against the passage of time and technological changes, it must have the important quality of scarcity, it must be widely accepted, it must enjoy high liquidity, and it must be easy to carry and transfer. These are the characteristics that appear in most of the documents I consulted.

As we can see, based on the characteristics we consider in these concepts, Bitcoin has both, so How should we classify it?...

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I can say that it's in a process of transition from one thing to another, as it's very new; it doesn't even have a 20-year lifespan, unlike gold, which has been the primary store of value for millennia. There's no point of comparison in terms of time. Even so, Bitcoin has displayed interesting behavior during different economic cycles. For example, during periods of high inflation or economic uncertainty, there have been times when many investors have considered it a safe haven. That doesn't mean it has yet earned the title of "store of value," but there is a collective intention pushing it toward that category. In other words, the market is testing it.

However, we must also be honest: Bitcoin remains a very volatile asset. It doesn't behave with the stability of a classic reserve. Just look at any weekly price chart to notice the abrupt ups and downs. This still makes it far from being a solid reserve, at least under traditional parameters. But at the same time, it is scarce, divisible, decentralized, portable, and its network is increasingly secure and globally accepted.

_{My tradinngviw Account Source}

So? We could say that Bitcoin today is ambivalent: for some, it remains a risky asset, especially for large funds that see it as a growth opportunity in bullish cycles; while for others, especially those who understand its technology and fundamentals, it already acts as a store of value.

And this is where I want to know your thoughts. Will Bitcoin ever be considered, like gold, a true store of value? Or will its very digital nature and volatile history always leave it in the realm of risky assets?

I believe we are facing an evolutionary process, and likely with market maturation, institutional adoption, and clearer regulation, Bitcoin will eventually consolidate itself as a new store of value for future generations. But that path is still under construction.

What do you think? Is Bitcoin a risk, a safe haven, or both at the same time?