Sea King
Bitcoin is a digital asset designed to perform the function of money, and it indeed possesses a number of properties inherent to good hard money. It is not surprising that among those who actively use Bitcoin, there has been a supposition that it is an excellent safe-haven asset, and that in the event of a financial crisis, money would flow specifically into it. As for gold, it is a safe-haven asset with a centuries-old history, and the fact that it would rise during a crisis was not subject to any doubt whatsoever.
Nevertheless, let us recall how gold behaved during the previous crisis. From March to November 2008, while the mortgage crisis was gradually turning into a financial one, the price of gold fell: everyone needed dollars specifically to plug the holes. And only when central banks began to compete in who could lower interest rates faster and buy up more junk papers did the resulting excess of dollars lead to a two-year rally in the gold market, during which its price reached an all-time high.
Currently, we are at the very beginning of the crisis. Just like last time, everyone is first running to the dollar. But, unlike in 2008, when quantitative easing was far from immediate, there was no delay in pumping the economy with fiat this time. On the other hand, it must be noted that immediately before the start of the crisis, the price of gold was close to all-time highs, as central banks had been actively buying it for several preceding years. It is possible that a number of countries will now feel the need to sell part of their reserves, and this will put pressure on the price. Thus, on one hand, many new dollars suitable for buying gold will appear in the market, and on the other, there will be a lot of gold sold from reserves. It is impossible to predict with certainty which of these opposing factors will be more significant over a horizon of up to a year. Further on, of course, the factor of the growth of the dollar mass will outweigh it, and gold will begin a new rally.
Today, Bitcoin is gold for geeks. Institutional investors have not yet had a chance to properly enter, and by their standards, the liquidity of this asset is completely negligible: the daily trading volume of Bitcoin is some measly thirty billion dollars, which is essentially nothing by the standards of stock and currency exchanges. Therefore, even a very modest sell-off of Bitcoin is capable of seriously dropping its price. But conversely, even very modest investments from the “big players” are capable of seriously heating it up.
In addition to the fact that the global economy will soon be flooded with dollars and other fiat, the reduction in supply will inevitably influence the price of Bitcoin: there are less than two months left until the halving. Therefore, if you have free fiat, now is a great time to enter Bitcoin. If there is an opportunity to take a fiat loan for about three years, investing that money in Bitcoin could also prove to be an excellent decision. Of course, one should not take microloans for this purpose.
In conclusion, I will comment on why buying US government debt may be more attractive than buying dollars. Purchased dollars sit in a bank, and a bank is an unreliable thing during a crisis. Bonds, however, are registered directly to the investor, and therefore the risk of their loss is incomparably lower. The liquidity of US government bonds is quite comparable to the liquidity of the dollar. So, there will be people willing to hold them even at a negative interest rate, although this seems counterintuitive.