Is your Bitcoin still a store of value when there is an economic recession or a collapse in the capital markets?

With the collapse of the capital markets yesterday, investor panic has also spread to the cryptocurrency market. The price of Bitcoin plummeted by 16% at one point during the day, although it has since recovered half of the losses. The debate over whether Bitcoin truly possesses the ability to store value has once again sparked controversy between supporters and opponents of Bitcoin.

Dow Jones plummets another thousand points, Federal Reserve officials reassure: No recession in sight

This article is not investment advice

Is the Value Storage Position of Bitcoin Supporters Being Overturned?

Bloomberg columnist Joe Weisenthal questioned the views of Bitcoin supporters yesterday in a tweet, stating that the "value storage theory" of Bitcoin is being overturned:

Bitcoin doesn't look like new gold; it looks more like three tech stocks in trench coats, suggesting that Bitcoin's volatility is extremely high.

Whether It Is a Store of Value Depends on Investment Perspective

Effective Hedge Against Inflation

CoinDesk's index products manager Andy Baehr stated in a comment that even though U.S. Treasury yields have fallen to their lowest levels since January, they often become the go-to safe-haven asset and are frequently compared to Bitcoin.

However, he believes that this comparison is meaningless, and investors should distinguish between "value storage assets" and "safe-haven assets":

The former is based on long-term expectations, while the latter is based on liquidity and quick hedging reasons.

Nevertheless, he also admitted that Bitcoin remains a speculative and highly volatile asset in many cases; but over time, its scarcity, portability, and advantages of being free from any physical intervention will make Bitcoin a true store of value asset:

Investors who adopt this perspective do not see Bitcoin as a safe haven during market fluctuations, but as a safeguard against the gradual erosion of purchasing power of fiat currencies.

Baehr emphasized that long-term Bitcoin holders who are concerned about central banks or monetary policies are not focused on whether Bitcoin rises or falls, but on the devaluation of the U.S. dollar:

Although it may seem unreasonable, there could indeed be an investment target that is both a "risk asset" and a "value storage tool" at the same time.

A Means of Resisting Unjust Power

On the other hand, Arthur Breitman, co-founder of the Tezos blockchain protocol, pointed out that Bitcoin's resistance to assets control power, including but not limited to banks, makes it to some extent a "store of value":

If a bank account is frozen, Bitcoin would be a good means of value storage.

Sold in Liquidity Crises, Held in Debt and Inflation Crises

Dan McArdle, co-founder of crypto data firm Messari, referenced an old tweet in which he wrote a set of sentences for Bitcoin:

Bitcoin should be sold in times of liquidity crisis and rise in times of national debt growth and fiat currency confidence crisis.

As previously stated by Jack Mallers, founder of payment startup Strike, and ETF issuer VanEck, Bitcoin shares many investment attributes with gold, but has advantages in divisibility and transparency. As the digital economy grows, it may become a better choice:

As Bitcoin matures, its role as a hedge against inflation and cornerstone of diversified investment portfolios may become more pronounced.

How does ETF issuer VanEck add value to clients' Bitcoin beliefs? Understand the principles of Bitcoin investment