Global Equity Meltdown to Lift Bitcoin as Digital Gold?
In times of market turmoil, investors generally move their money away from riskier holdings into safe-haven currencies or precious metals such as gold. For Tim Draper, a founding partner of prominent Silicon Valley venture capital fund Draper Fisher Jurvetson, bitcoin could emerge as a safe-haven store of value during this type of market environment as well.
Global equity markets have been tumbling in the past few days, only to enjoy a brief respite mid-week then start falling again. China has already taken several measures to stem the bloodbath in their stock market, such as cutting interest rates or restricting margin requirements for speculative trading, but it appears that market confidence is hitting all-time lows.
Economic Crisis and Bitcoin?
“When bitcoin is mature, I expect people to run to bitcoin the way they do to gold when the market gets scary,” Draper said to Bitcoin Magazine. “Currently, there is not enough usage to make people feel comfortable investing in Bitcoin when they come out of the market. I expect that to change.”
However, Draper clarified that bitcoin is far too speculative of an investment to be a stable store of value for now. The price of the cryptocurrency has fluctuated as violently as stock indices in the past few days, owing partly to technical glitches. Nonetheless, Draper highlighted the limited supply of bitcoin and how scarcity could keep value propped up.
“There will be pressure on bitcoin pricing as there is supply to sell as miners get more bitcoin, and less demand to buy as the use cases evolve,” Draper explained. In essence, miners need to sell their bitcoin more to pay for electricity than hoarders and users need to buy. This results in a drop in the price. I expect this phenomenon to turn around in about 6 months as use cases become apparent.”
Via: http://www.newsbtc.com/2015/08/27/global-equity-meltdown-to-lift-bitcoin-as-digital-gold/
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