Over the past seven days, Bitcoin is up 10.50%, following a string of significant gains during the week. In particular, the largest crypto asset rose 7% on Monday after fake news emerged about the approval of BlackRock’s iShares Bitcoin Spot ETF.
As expected, this appreciation has caused a lot of reactions from various crypto enthusiasts and analysts.
In particular, Larry Fink, CEO of BlackRock, said in an interview with Fox Business that BTC’s surge was partly due to the fake news of spot ETF approval, but also to the growing demand for a safe haven for investments.
According to Fink, rising geopolitical tensions – citing the ongoing conflict between Israel and Palestine – have created uncertainty, pushing investors into traditional assets like gold, but also into crypto assets.
BlackRock’s CEO describes this trend as a “flight to quality.”
Dissecting Bitcoin’s Flight to Quality Theory
Will Bitcoin Benefit From ‘Flight to Quality’?
As US Treasuries face a historic sell-off, with the 10-year yield hitting a 16-year high of 5%, investors are looking to alternative assets.
🔹 Long-term bonds fell 20% in 6 months and are down 53% since March 2020.
🔹 US Debt… pic.twitter.com/ekaWjK5fs5— IntoTheBlock (@intotheblock) October 20, 2023
Following Larry Fink’s statement earlier this week, blockchain analytics and research firm IntoTheBlock has now released a report assessing the feasibility of Bitcoin as a Flight to Quality asset.
In Friday’s post, IntoTheBlock highlighted various factors that support Fink’s claim. First, the analyst firm said U.S. Treasuries are experiencing a historic selloff as 10-year long-term bond yields hit 5% this week.
In general, US bonds are considered one of the safest forms of investment. Developments like this, however, are usually defined as negative. This is because an increase in bond yields reduces the demand for existing lower-yielding bonds and, in turn, depreciates those bonds.
As expected, this rising bond yield has resulted in a 20% depreciation of long-term US Treasuries over the past six months. Meanwhile, there has been a significant 53% decline in the value of these investment assets since March 2020.
Bitcoin records less volatility than US Treasuries
Additionally, 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 highlighted Bitcoin’s remarkable performance during this bond market crash, comparing it to the asset’s positive price movement during the US bank run earlier in 2023.
The blockchain research firm noted that the crypto market leader matched gold with a 7% gain back in October and is gaining more recognition as a favorable alternative investment asset from several Wall Street financial experts.
Considering all the factors listed above, IntoTheBlock states that there are growing signs that Bitcoin is becoming a safe haven for traditional investors and could greatly benefit from the Flight to Quality movement, especially with the potential launch of Spot Bitcoin ETF.
At the time of writing, Bitcoin is trading at $29,667 with a 0.27% loss in the last day. In tandem, the token’s daily trading volume has decreased 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 by iStock, chart by Tradingview