09.33 Monday 29 October 2018

October has been a tumultuous month for global equities and could be heading towards the worst month for 3 years. As happens so often when the market gets spooked, many investors look towards safe havens to protect themselves in uncertain times. Traditionally, gold, treasury bonds and currencies like the Yen and the Swiss Franc are considered as safe havens, but a new player may be entering the arena.

Cryptocurrencies like Bitcoin and Ethereum have been known for their wild volatility since their inception with huge peaks and troughs, but this foreboding period for equities has seen the cryptos hold their value in an uncharacteristic manner. From early September, Bitcoin has seen its most stable period seemingly unaffected by market conditions that have rocked other investment vehicles.


 When compared with major global indices, Bitcoin has outperformed the NASDAQ by 8%, the FTSE by nearly 5% and the DAX by nearly 7%.


Whilst this current trend remains an intriguing option for investors, there are still at least two points to consider.

Firstly, cryptocurrencies are still in their infancy. Although Bitcoin was introduced in 2009, it did not reach high volume trading and common place acceptance by the investment community until the past 2-3 years and within this period its volatility has seen lows of $806 and highs of $19,587 in less than a year. This lack of historical data may cause investors looking to crypto as a safe haven to take somewhat of a leap of faith.

Secondly, sometimes the traditional methods are the best way to go. In the same period that Bitcoin has remained relatively stable over the course of month, gold has still bettered the cryptocurrency, perhaps signifying that general market sentiment is still not quite ready to ditch its staple havens just yet.

To get more analysis on Bitcoin, Safe Havens and Portfolio Diversification, please feel free to talk to one of our brokers on 0121 454 0770 or enter your details in the form below.

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