Bitcoin’s Safe Haven Narrative Re-Emerges Amid US Bank Failures and Rising Gold Prices
In the wake of the failure of Silicon Valley Bank and Signature Bank, depositors have been urged to put their money into gold. Although the rise of Bitcoin has been a challenge for the precious metal to maintain its status as a secure investment, the price movement of BTC and gold has been pretty similar lately. On Monday, BTC rose above $24,000, marking an 18% increase in the last 24 hours. The shutdown of Silicon Valley Bank was one of the biggest bank failures in the history of the United States, and while the impact of this event was not limited to the financial sector, the crypto market suffered as well. However, looking at the emerging pattern, it seems like Bitcoin price has made it out unscathed and re-earned a much-talked-about tag: “safe haven.”
Bitcoin’s Lost Safe Haven Status
Bitcoin was once considered a low-risk asset, unaffected by fluctuations in the global financial markets before the turbulent movement of the cryptocurrency market. This was why it was considered a secure investment. This tag has also been shared by gold, an asset class that is considered to be one of the most secure investments. The precious metal has maintained its value despite changes in times and the ends of civilizations. Although Bitcoin is a relatively newer asset, it earned this tag soon after launch but lost it after the rise of volatility and a rising correlation with the stock markets. Any significant economic event resulted in a change in BTC price accordingly.
BTC and Gold Prices in Tandem
Despite their differences, BTC and gold prices seem to be moving in tandem after both recovered from recent lows. BTC recovered almost 18% of losses it incurred in February, resulting in the cryptocurrency’s 18% increase in the last 24 hours. Similarly, gold took a hit but recovered soon after. The trajectory of BTC and gold prices has been alike recently. Expectations that Bitcoin will continue mirroring the precious metal have been noted by the community, which is a good thing since many analysts have been pushing gold over fiat.
According to Peter Schiff, an analyst and founder of Europac, the risk associated with bank deposits comes not from bank failure, but from inflation. The value of all bank deposits will fall as inflation socializes the losses. Anyone with savings in a bank should withdraw it fast and buy gold. If gold purchasing increases, Bitcoin will also experience positive momentum as investors will try to protect their money from bank crises.
Bitcoin Price Takes a Hike
At the time of writing, the Bitcoin price was trading above $24,000, managing to climb to the critical resistance at $24,943. The 18% rally in the last 24 hours has brought BTC close to breaching and flipping the critical resistance into support. If this happens, Bitcoin price will mark a new year-to-date high as well as a nine-month high.
However, if the “safe haven” narrative turns out to be a fakeout and Bitcoin price collapses due to excessive external pressure, the cryptocurrency could fall to $21,410. This line acts as the crucial support level, and slipping below it would invalidate the bullish thesis, pushing the price to $20,000.
Conclusion
As US banks continue to go belly-up, depositors are urged to put their money into gold, and as gold prices increase, investors are trying to protect their money from bank crises by purchasing gold and Bitcoin. Both BTC and gold prices seem to be following a similar trajectory lately, re-earning Bitcoin its “safe haven” status. The Bitcoin price has also surged 18% in the last 24 hours, almost reaching the critical resistance level at $24,943. If the cryptocurrency breaches this level, it would mark a new year-to-date high as well as a nine-month high. However, if the “safe haven” narrative turns out to be a fakeout, the BTC price could fall to $21,410 or even $20,000.
