Bitcoin Could Benefit From “Flight To Quality” Trend: Report

In the last seven days, Bitcoin has gone up by 10.50%, following a series of significant gains across the week. Most notably, the largest crypto asset surged by 7% on Monday following the emergence of fake news on the approval of the BlackRock iShares Bitcoin Spot ETF.

As expected, this price gain drew a plethora of reactions from various crypto enthusiasts and analysts.

In particular, Larry Fink, the CEO of BlackRock, stated in an interview with Fox Business that the BTC surge was partially due to the fake news of the spot ETF approval but also because of a growing demand for an investment safe haven. 

According to Fink, the increasing geopolitical tensions – citing the ongoing Israel-Palestine conflict – have created uncertainties driving investors to traditional assets such as gold, but also crypto assets. 

The BlackRock CEO describes this trend as a “flight to quality.”

Dissecting The Bitcoin ‘Flight To Quality’ Theory

Will Bitcoin Benefit From a “Flight to Quality”?

As US bonds face a historic sell-off, with 10-year yields hitting a 16-year high of 5%, investors are seeking alternative assets.
🔹 Long-term bonds have plummeted 20% in 6 months and are down 53% since March 2020.
🔹 US debt… pic.twitter.com/ekaWjK5fs5

— IntoTheBlock (@intotheblock) October 20, 2023

Following Larry Fink’s statement earlier this week, blockchain analytics and research firm IntoTheBlock has now posted a report evaluating the feasibility of Bitcoin as a “Flight to Quality” asset. 

In the post on Friday, IntoTheBlock highlighted various factors that backed Fink’s claim. Firstly, the analytic firm stated that US bonds are experiencing a historic sell-off as the 10-year yields on long-term bonds hit 5% this week.

Generally, US bonds are considered one of the most secure investment forms. However, developments such as this are usually termed as negative. This is because an increase in bond yield leads to declining demand for existing lower-yielding bonds and in turn, the devaluation of these bonds. 

As expected, this increasing bond yield has resulted in a 20% depreciation of long-term US bonds over the last six months. Meanwhile, there has been a significant 53% decline in the value of these investment assets since March 2020. 

Bitcoin Records Less Volatility Than US Treasuries

Furthermore, IntoTheBlock highlighted that Bitcoin’s volatility is currently lower than that of these US long-term bonds, indicating it offers a higher level of stability to traditional investors looking at the value of their investment. 

Finally, the research firm pointed out Bitcoin’s remarkable performance during this bond market crash, likening it to the asset’s positive price movement during the series of US bank collapses earlier in 2023. 

The blockchain research firm noted the crypto market leader tallies with gold with a 7% gain already in October and is receiving more recognition as a favorable alternative investment asset by several Wall Street financial experts.

Considering all the factors listed above, IntoTheBlock states that there are growing signs that Bitcoin is becoming a safe haven for traditional investors and could largely benefit from a “Flight to Quality” movement, especially with the potential launch of spot Bitcoin ETF.

At the time of writing, Bitcoin is trading at $29,667 with a 0.27% loss in the last day. In tandem, the token’s daily trading volume is down by 18.70% and is currently valued at $15.86 billion. 

BTC trading at $29,661 on the hourly chart | Source: BTCUSDT chart on Tradingview.com

Featured image from iStock, chart from Tradingview