Renowned financial analyst Lyn Alden shed light on Bitcoin’s BTC/USD place in the current economic landscape, highlighting why Bitcoin is a solution rather than a hedge.
What Happened: In an appearance on the “What Bitcoin Did” podcast, Alden emphasized that Bitcoin should not be viewed as a traditional risk-off asset. She pointed out that its price often declines during crises due to liquidity issues rather than fundamental weaknesses. "Bitcoin provides 24/7 liquidity, which is both a strength and a weakness in terms of price action," the analyst noted.
A recent analysis indicated that increased institutional adoption of Bitcoin may explain its correlation with traditional markets. It added that BTC is now correlated to traditional cyclical assets, rather than trading as a countercyclical safe-haven.
The analyst distinguished “pro-liquidity” and “anti-liquidity” crises, pointing out that Bitcoin performs better in the former. She cited the 2023 U.S. regional bank crisis as an example where Bitcoin initially dipped but quickly rebounded once markets anticipated increased liquidity from the Federal Reserve.
Addressing concerns about Bitcoin’s volatility during economic downturns, Alden suggested investors may want to consider Bitcoin on a longer time horizon. “I wouldn’t think of Bitcoin in anything less than four-year increments,” she said, characterizing it as a “structural growth story” rather than a short-term hedge.
Why It Matters: Alden also discussed broader economic trends, including potential shifts in global capital flows and the challenges facing major economies like Japan and the United States.
She suggested that as the U.S. economy softens and interest rates potentially decrease, capital might flow to emerging markets, benefiting commodities and possibly Bitcoin.
In conclusion, Alden framed Bitcoin not as a hedge but as "a solution" – an alternative system being built for future economic challenges. Her insights underscore the importance of understanding Bitcoin’s unique characteristics and its evolving role in the global financial landscape.
What’s Next: The influence of Bitcoin as an institutional asset class is expected to be thoroughly explored at Benzinga’s upcoming Future of Digital Assets event on Nov. 19.
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This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image created using artificial intelligence with Midjourney.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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