Nik Bhatia, founder of The Bitcoin Layer, said that 15-year-old Bitcoin is still too immature to be considered a safe haven asset.
In a CNBC interview published Tuesday, Bhatia said that Bitcoin has traditionally been perceived as risky due to its relatively short history.
The financial researcher, author of “Layered Money: From Gold and Dollars to Bitcoin and Central Bank Digital Currencies,” noted that Bitcoin often mirrors the stock market’s movements. It typically fluctuates alongside equities. However, he also pointed out times when Bitcoin has diverged from the stock market, showing significant growth during these periods.
Bitcoin’s Journey to Safe Haven Status Faces Challenges
Bhatia believes these episodes showcase Bitcoin’s potential as a hedge against excessive monetary and fiscal policies over the past decade. He views Bitcoin as striving to become a safe haven asset. This would protect investors from the inflationary effects of these policies.
“However, because Bitcoin is a young asset, it still most of the time trades like a risk-on asset. And that’s why you see it crater alongside global stocks this week,” he added.
Bhatia Remains Bullish on Bitcoin Despite Recent Drop
Bitcoin tumbled over 10% on Monday, mirroring a broader market downturn, before recovering slightly on Tuesday. The crypto asset has fallen 16% over the past week.
Despite this recent downturn, Bhatia maintains his bullish outlook on Bitcoin, 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,” he noted. “Although I understand, for a lot of holders right now, it can feel very scary.”