Is Bitcoin Still a Store of Value?

On days like these, 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 as financial markets fell across the board, 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.

To skeptics, Bitcoin’s volatility is like that old Billy Crystal comedy line: “Where’s your savior now?”

“The Bitcoin ‘store of value’ thesis 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 is a more nuanced view of this issue, which requires examination from the perspective of image.

“We shouldn’t confuse a store of value asset with a safe haven asset,” 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, Treasuries “tend to be the safe haven 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 does not enjoy safe-haven asset status.

“There’s no question that Bitcoin remains a volatile asset, speculative in many cases, leveraged in many cases, and tradable in many cases,” Bell said. “But its properties are promising, and over time, its scarcity, its portability, and its independence from any government or corporate policy make it a really interesting asset to use 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 ever-declining purchasing power of the U.S. dollar. Bitcoin’s supply is predictable, fixed at 21 million, and unaffected by the whims of policymakers.

“People who are long-term Bitcoin holders, especially those who are worried about ... national debt, central bank policy, all those things ... feel like 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 is possible for something to be both a risk-on asset and a store of value at the same time. “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.

“Bitcoin is a great store of value if…bank accounts are seized,” he wrote in a response to Weisenthal on X. “It’s a matter of context.”

In another reply to Wiesenthal, Dan McArdle, co-founder of crypto data service Messari, referenced an old post in which he described his expectations for how Bitcoin would perform in different types of disasters.

It should “sell in a liquidity crisis situation and rise in a sovereign debt/fiat confidence crisis,” McArdle wrote in 2018. Monday was an example of the former.

As for a more tried-and-true store 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 “VC-like bet on its future as a store of value,” he said. “Bitcoin is still being accepted. That’s why it has both volatility and growth potential.”