2016 – The year a new “safe haven’ investment was born
2016 was dubbed “the year of worry”, because many major political and economic events too place.
- Britain voted to leave the EU sending shockwaves around the world.
- The Chinese government deflated its currency even further sending investors flocking. Venezuela did the same.
- The rand flew past R16 to the dollar.
- Zimbabwe saw the return of hyperinflation
In short, political uncertainty, currency devaluation and weakness sent investors fleeing into alternative assets – most notably,cryptocurrencies.
In fact, this flow of money into cryptos was posted all over the media…
“Brexit – Bitcoin price rockets” - International Business Times
“Chinese investors buying up bitcoin” – Wall Street Journal
“Venezuelans escape currency collapse with bitcoin” – Latin American Post
I even wrote an article which explained Zimbabwe’s hyperinflation. In short, the Zimbabwean Government issued government bond notes as a currency.
But the problem was, the bond note became more worthless each day that went by. This caused widespread panic throughout Zimbabwe.
So what did some Zimbabweans do?
Converted their bank balances into Bitcoin. In addition, some even adopted Bitcoin as a main source of payment and used it as a saving mechanism.
In fact, at one stage, the price of Bitcoin in Zimbabwe was much higher than the price of bitcoin on an international exchange – proof demand soared in a crisis.
But also consider this…
In November 2016, when China tightened capital outflows, there was a surge in bitcoin buying. It was up more than 140%.
Crypto-coins like Monero and CloakCoin climbed 436% and 560% respectively.
As Leonid Bershidsky wrote on bloomberg.com:
“Bitcoin is an escapist safe haven… Speculators are driving up the value of the cryptocurrency because, for the first time in its history, it's looking like a reliable safe haven investment.”