20 Aug, 2019

Hong Kong Demonstrations Strengthen Bitcoin’s Safe-Haven Status

A new Bitcoin skeptic is featured in the latest cryptocurrency news – providing analysis that is contrary to the arguments of the Bitcoin bulls. As the skeptic believes, Bitcoin is not a hedge against anything – much less the stock market. But before we dive in his analysis, let’s explore the term hedge. A “hedge” is basically an investment made to offset some form of risk. As such, it can take many forms. For example, an investor may purchase put options on the stock market which will increase if the market falls. Therefore, the key to a hedge is that as an investment, it offsets risk in another investment. The Bitcoin skeptic claims that as such, BTC is not a hedge for anything. He has been featured on many best cryptocurrency news sites, talking about risk and volatility.  It is obvious that Bitcoin is more volatile and riskier than other securities. According to analysis, Bitcoin is about 60% more volatile than even a 3x leveraged version of the most volatile security on the market. Therefore, the Bitcoin skeptic claims that there is no chance that BTC could be a hedge against anything – let alone other popular altcoins in the altcoin news. According to Ed Butowsky who is the BTC skeptic and Managing Partner at Chapwood Capital Investment Management:

“Bitcoin is literally the riskiest tradeable asset right now, and I wouldn’t even call it an asset. It is literally backed by nothing and based entirely on speculation. That’s why it is so volatile. It’s a sucker’s bet, not a hedge.”

Butowsky also pointed out that no other chart could correlate (positively or negatively) to any other asset. Any expert who says otherwise, is “dead wrong” the Bitcoin skeptic claims. He even went on to point a video of an analyst saying that Bitcoin can be a good hedge, which can be seen on this YouTube link. And for those of you who think that Bitcoin is a perfect non-correlated asset to the stock market, the idea of the hedge is to offset risk. Bitcoin, with its current performance, only increases the overall risk in a portfolio.  

 

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