Aoifinn Devitt, a senior investment advisor at Moneta, has expressed concerns regarding the common belief that cryptocurrencies, such as Bitcoin and Ethereum, can serve as a safe haven during times of economic instability.
In light of the recent market downturn, which resulted in a 27% drop in Ethereum’s value, Devitt emphasized that cryptocurrencies are highly speculative and should be classified as “risk-on” assets. She believes that the inherent volatility of these digital assets makes them unsuitable for investors seeking stability in turbulent markets.
Devitt refuted the idea that cryptocurrencies could withstand a financial crisis like traditional safe haven assets, stating, “We do not yet have enough comprehensive data to assess how they would perform in a serious market downturn.”
Her skepticism stems from the lack of understanding regarding how crypto assets respond to key economic factors, such as inflation and interest rates. While some argue that Bitcoin could act as a form of digital gold, Devitt disagrees. She noted, “Bitcoin might offer some protection against fiat currency depreciation, but it is far from being the secure hedge that some imagine it to be.”
Devitt also highlighted the enduring strength of fiat currencies, particularly the U.S. dollar, which continues to dominate despite the appeal of Bitcoin. She added, “There does not appear to be significant demand for alternatives to the dollar at the moment.”
Regarding the growing popularity of Bitcoin, Devitt acknowledged that it is less volatile than other digital currencies, making it a more attractive entry point for risk-tolerant investors. She explained, “If you are venturing into crypto but prefer a less erratic option, Bitcoin is probably the place to start.”
While Bitcoin ETFs are increasing the mainstream adoption of cryptocurrencies, Devitt warned that this accessibility does not guarantee greater safety. She concluded, “The crypto market may be more liquid and accessible now, but it is still not a reliable safe haven.” She cautioned conservative investors seeking security that the landscape is still too unpredictable.
Translation by AI.