Experts wonder if Bitcoin is a ‘risky asset’ or an ‘insurance asset’
The Evergrande debt crisis in China has not only rocked the real estate industry, but has also thrilled the crypto sphere. FUD and crypto exchanges in China rejecting China-based users caused the price of the royal coin to drop as fear gripped the market.
During an episode of the What Bitcoin Has Done podcast, host Peter McCormack spoke with trading expert Greg Foss and author and investor Andy Edstrom to discuss the impact of Evergrande, BTC as a safe haven asset, the evolution of banks and reasons to keep an eye on Tether.
Evergrande vs. Bitcoin
Discussing China’s second-largest real estate developer, Edstrom said the Evergrande crisis was likely a “catalyst” for Bitcoin’s price decline. Discussing Bitcoin’s correlation with gold, bonds and stocks, he said,
“But when you look at the stressful times overall in the financial markets, then yeah, basically it’s correlated and especially in recent years, and it’s not surprising, right? It is now probably the most liquid market in the world, as it trades 24/7, everywhere.
Edstrom added that he wanted Bitcoin to be the “safe haven asset” that it would be difficult to “push”, but predicted such a development was about ten years away.
For his part, Foss clarified that he considers Bitcoin to be an “insurance asset” and long volatility. However, he agreed with Edstrom’s ten-year prediction.
Risk asset vs safe haven
Edstrom was firm in always calling Bitcoin a “risky asset,” noting that there is a good chance that the price of BTC will drop when other risky assets fall as well. McCormack admitted that he viewed Bitcoin as a “long-term safe haven asset,” but also admitted that he was holding a little more money than usual, as a hedge against Bitcoin’s recent performance.
“… I don’t really know where we’re going. “
McCormack also added that he was considering owning a “little bit of gold”. Foss then intervened to say that he also owned gold and silver.
As they discuss the rise of neo-banks, McCormack and Foss questioned whether payment intermediaries like Western Union are going to fall slowly or quickly. Foss pointed out,
“Over time Bitcoin will be the benchmark for proper capital allocation and everything else will pay the poor, and Western Union? Uh, I’m sorry guys, but your business is riding the horse and buggy.
When the newswires started blinking because of the Evergrande crisis, Tether [USDT] – the Hong Kong-based stablecoin – has come under intense scrutiny. Tether had to issue a statement that it did not hold any commercial paper issued by Evergrande. However, Edstrom didn’t really believe Tether’s claims.
“… but that’s deny, deny deny, you know that’s what governments always do – you know before the wheels really fall off the train or the train derails.”