Now that bitcoin has yet again reached new record highs, blowing past the $10,000 mark for the first time and trending well towards the next milestone, many institutional investors are speculating that bitcoin will be a useful haven in the coming future.
Both Traditional and Cryptomarkets Turn Bearish
With stock markets also performing well and reaching new highs, many are getting bearish and believe that a correction or crash is on the horizon. These concerns have many investors now looking at how best they can protect their assets and cover their downsides in case the crash occurs.
When traditionally discussed, bitcoin garnered laughs from finance experts and said that it would amount to nothing. Now at the end of 2017, bitcoin is still going from strength to strength, and a lot of people have had their minds changed.
Expert Predictions Speculate on New Heights
There are now finance experts such as Max Keiser and Ronnie Moas who are even forecasting that bitcoin is going to continue growing in 2018 and bypass the next milestone with ease.
Some people are even saying that if a stock market crash comes, a lot of investors may turn to bitcoin as a haven for their funds. This shelter comes from the fact that the crypto market, in general, has been less volatile in recent times. A lot of professional investors are now viewing it as a form of insurance to hedge against their downsides.
The stock market is currently experiencing the second most extended bull run in history, having been going consistently for the past 104 months. The longest one of all time finished in the year 2000 after a run of 113 months. As this term has gone on for a substantial amount of time, investors are currently putting contingency plans in place to ready themselves for a contraction.
Despite their CEO continually bashing bitcoin and calling it a fraud, JPMorgan Chase announced that they would trade the bitcoin futures contracts released by the CME Group before the end of the year.
The shift in sentiment shows that traditional financial circles are looking at cryptocurrencies for investing their funds as opposed to equities which seem to be due a crash or setback shortly.
Hedging Bets in Crypto
Diversification is, of course, the name of the game when it comes to investing, so a lot of investors are trying to hedge the downside risks of their equities positions by turning to bitcoin and the like.
They want to invest in something that is uncorrelated with the stock markets so that when a crash of the markets occurs, this alternative investment will not be affected. Many investors now consider bitcoin to almost be a store value in a similar way to gold. Of course, bitcoin originated at the start of this bull-run so it is hard to definitively predict how it will react when there is a market crash.
It is certainly time to re-assess positions in the stock market and identify the best safeguards for funds that are out there today.