Today the US economist Nouriel Roubini tweeted again against Bitcoin. This is his post:
In the meanwhile Bitcoin is down 8% in the last day, much more than global equities. Another proof that Bitcoin is NOT a good hedge vs risky assets in risk-off episodes. It actually falls more than risky assets during risk-off. So BTC is a shitty shitcoin hedge in risk-off cases
— Nouriel Roubini (@Nouriel) March 9, 2020
As can be read, Roubini attacks BTC because its price has dropped 8% in the last few days, more than equity, showing – according to the economist – that bitcoin is not a good store of value but only a shitcoin.
In the last few days, Roubini has posted many tweets about the market downturn partly caused by the Coronavirus, explaining that equity is falling by 2-3% and predicting the beginning of a new global recession.
The week will start with US and global equities down another 2-3%, credit spreads blowing up especially for HY & credit markets seized and frozen, 10 year Treas yields even lower, & oil prices sharply down. Perfect risk-off storm and a true signal of upcoming global recession!
— Nouriel Roubini (@Nouriel) March 8, 2020
Is Bitcoin a store of value?
The assumption of Roubini is based on the premise that BTC is a store of value. But is it really?
A store of value is an asset that overtime is destined not to lose value, such as gold and diamonds.
For some time it has been debated whether bitcoin can be identified as such and what is its purpose in general.
According to a careful analysis of Bitcoin’s whitepaper, Satoshi Nakamoto apparently wanted BTC to be “electronic money” to “directly send online payments from one entity to another without the need to go through a financial institution”, thus a currency that would be spent on the Internet and not stored in order to hold it for a long time.
It is also true that other texts, in particular extrapolated from their context, may suggest that Satoshi wanted bitcoin to be a store of value, but this has never been declared openly.
Of course, like all inventions, bitcoin may also deviate from Satoshi’s initial idea. But is this really the case?
Taking some dates as a reference, the first of January of each year, for example, let’s see how the price has evolved:
According to CoinMarketCap data, these are the prices marked by bitcoin from 2013 to date:
- January 1st, 2014: $771.40
- January 1st, 2015: $314.25
- January 1st, 2016: $434.33
- January 1st, 2017: $998.33
- January 1st, 2018: $13,657.20
- January 1st, 2019: $3,843.52
- January 1st, 2020: $7,200.17
Basically, it all depends on when the investment is made and when the exit is made, a bit like for all assets, although in the case of BTC the volatility is certainly much higher as the price has varied by more than 1000% from one year to another.
Conversely, gold, always considered the store of value par excellence – looking at its historical data – has had variations of “only” 70% in 4 years.
- January 1st, 2014: $1,202
- January 1st, 2015: $1,184
- January 1st, 2016: $1,060
- January 1st, 2017: $1,151
- January 1st, 2018: $1,309
- January 1st, 2019: $1,281
- January 1st, 2020: $1,523
As a result, perhaps Roubini should stop criticizing bitcoin as a store of value, but only reflect on Satoshi Nakamoto’s original invention: a currency aimed at decentralized virtual payments. Everyone would surely be happy if BTC’s price went up, but maybe that’s not the only point.