There have been two occasions where Bitcoin was considered an alternative safe haven to gold and cash. The first occasion was when it first hit the markets and started to trade around for extremely low prices, and the second was when it hit its highest valuation in 2017.
Ever since then, the debate on whether or not the alternative safe has argument is true has been raging across multiple platforms.
However, we have now witnessed yet another occasion where the debate has flared up once more. And that is the first crisis in 2020, the Iran crisis.
As many knows, Iran and the United States are at each other's throats again, leading to multiple bombings, assassinations, threats, and general tension. All of these military and geopolitical activities led to Bitcoin growing in price considerably in the last couple of days. In fact, it was heading towards the $9,000 mark when tensions started to dwindle just a little bit.
The growth immediately stopped when President Trump came out with an announcement that the United States will start pursuing alternative methods to defuse the situation. Meaning that military strikes had a smaller chance of occurring in the future. Bitcoin immediately dropped below $8,000 after the announcement, signaling that investors were stocking up on the coin in the case of a full-scale war, but started to sell the assets when some de-escalation promises were made.
Exactly how gold behaves
This behavior from Bitcoin is the exact same thing that happens to gold during times of crisis. While almost every other asset, be it real estate, currency or digital assets drops down considerably, gold remains firm as its value is supported more by the global market rather than a specific local market.
Investors rush to gold simply because they know it has much more liquidity during a recession, while stocks, bonds, and every other asset tends to remain in place deteriorating over time.
So even if gold stops being an actual safe haven based on facts, it will still remain an in-demand asset due to investor belief.
A clear strategy for the next recession
Alerts have been firing up about an upcoming recession in the United States, and subsequently in the world. Investors are expecting major price drops in 2020, and this tension with Iran seems to be the first attempt to take the focus away from these issues.
However, since the Bitcoin safe haven argument was just an argument in the past, very few people believed that focusing their assets in the crypto market was pointless.
But now that we have cold hard facts about Bitcoin being the go-to asset for whole nations during the time of crisis, it's almost certain that the next recession could have Bitcoin jump to a new all-time-high exchange rate.
Some are saying $25,000 per coin, while others are predicting the same $20,000 due to additional uncertainty. Whatever the prognosis may be, there's a really high chance that Bitcoin will replace gold during the next recession and start a whole new understanding of safe havens in the market.
Additional facts about the popularity of Bitcoin during a crisis is the increasing number of Google searches for the term "Bitcoin Iran". Sure the most important clue is the increasing price of the asset itself, however, knowing Bitcoin could be pretty much anything else. But the increasing search volume is a fact that Iran is having an effect on the market.
It being such a specific geopolitical issue helps with identifying its influence, which would have been harder during a recession. But not that we know a crisis is effective, it will be easier to justify the arguments made before, during and after the financial crisis hits.