Is Bitcoin Still a Store of Value?

By Marc Hochstein, CoinDesk; Translated by Deng Tong, Golden Finance

On days like this, it’s easy to scoff at Bitcoin (BTC) — specifically, at the idea that the original cryptocurrency is a store of value, the digital equivalent of gold.

BTC fell on Monday along with broader financial markets, briefly falling below $50,000, its lowest level since February, before recovering some of its losses. By early afternoon New York time, the asset was down 9% in 24 hours, at $53,387.67.

For skeptics, Bitcoin’s volatility is like an old Billy Crystal comedy routine: “Where’s your savior now?”

“The Bitcoin ‘store of value’ narrative is now being touted,” Bloomberg columnist Joe Wiesenthal raged on X (formerly Twitter). “Bitcoin doesn’t look like the new gold. It looks like 3 tech stocks in trench coats.”

But there’s a more nuanced take on the issue that needs to be examined through the lens of imagery.

“We shouldn’t confuse store of value with safe haven assets,” said my colleague Andy Baehr, head of product at CoinDesk Indices. “The former is a long-term expectation asset, while the latter is a liquid and fast market asset.”

The “long-term” part is key.

On a day like Monday, when the Nikkei dropped 12% and the mood was reminiscent of "Black Monday" in 1987, U.S. Treasuries "tend to be the safe-haven asset that everyone looks at," Baehr said. Treasury yields, which move in the opposite direction to prices, are at their lowest level since January.

Bitcoin clearly doesn't enjoy safe-haven status.

"There's no question that Bitcoin remains a volatile asset, speculative in many cases, leveraged in many cases, and tradable in many cases," Baer said. “But its properties are promising, and its scarcity, its portability, and its independence from any government or corporate policy over time make it a really interesting asset that can serve as a store of value.”

Investors who view Bitcoin in this way see it not as a safe haven from day-to-day market volatility, but as an insurance policy against the dollar’s ​​declining purchasing power. Bitcoin’s supply is predictable, fixed at 21 million, and unaffected by the whims of policymakers.

“People who hold Bitcoin for the long term, especially those who are worried about ... national debt, central bank policy, all those things ... feel that it’s not important that Bitcoin goes up, it’s important that the denominator goes down,” Bell said.

He added that, while it may seem counterintuitive, it’s possible for something to be both a risk-on asset and a store of value. “People who use Bitcoin as a store of value are not unaware of its volatility.” Arthur Breitman, co-founder of the Tezos blockchain protocol and a cryptocurrency expert, noted that Bitcoin’s resistance to confiscation makes it a “store of value” in another sense. “If … bank accounts are seized, Bitcoin is a good store of value,” he wrote in a reply to Weisenthal on X. “It’s a matter of context.” In another reply to Weisenthal, Dan McArdle, co-founder of crypto data service Messari, cited an old post in which he described his expectations for how Bitcoin would perform in different types of disasters. McArdle wrote in 2018 that it should “sell in a liquidity crisis scenario, and rise in a sovereign debt/fiat confidence crisis.” Monday was an example of the former.

As for more tried-and-true stores of value, gold prices were down about 1% Monday afternoon.

“It’s unfair to compare bitcoin to a store of value that’s thousands of years old when it’s still in its infancy,” Alex Thorn, head of firmwide research at crypto investment bank Galaxy Digital, said of the comparison to gold.

Buying bitcoin is “a venture-like bet on its future as a store of value,” he said. “Bitcoin is still being accepted. That’s what gives it both volatility and growth potential.”