The current course drop can be explained by using Bitcoin as Safe Haven, as indicated elsewhere.
One of Bitcoin’s roles is that the crypto currency can be a virtual counterpart to gold in terms of its internal structure. This is why Bitcoin is often referred to as Digital Gold.
As with gold, people hope that investments in Bitcoin will be secure against financial or political crises.
The original motivation behind the development of the Bitcoin code was the creation of a digital currency. Many people still hope today that at some point the Bitcoin code will be used as such by the majority on a regular basis.
And yes, you can see that the use of Bitcoin increases every year. But what kind of use is increasing? Of course, Bitcoin transactions have increased steadily since the Genesis block, as you can see at a glance.
But if one can ask oneself whether this number comes about through exchange in fiat currencies, through movements between different wallets of a single user (e.g. between mobile wallet and hardware wallet), through Altcoin trading, fauces or games – or through the purchase of goods with Bitcoin.
When you talk about a virtual currency, it is this latter application that counts. The others speak rather for the use than digital gold.
And here we are dealing with a kind of vicious circle: Is such a use of Bitcoin as a currency really sensible in times of volatility, as we have experienced in recent months with the rising Bitcoin price in particular?
If you remember how a pizza was sold for 10,000 BTC in those days, you notice that people became much more reluctant to give away their coins. And rightly so: the value of the Bitcoin code continued to rise over the last year, while the world became a little more absurd every day with Brexit, Trump, the referendum in Italy and the monetary policies of India, Greece, Cyprus, Australia, China or Venezuela.
That’s why Bitcoin code should be seen as a safe haven rather than a currency. The question now is what could be a good candidate for a digital currency? After all, with Monero or Dash, there are Krpyto currencies that could fulfil this role.
Author’s commentary (Philipp Giese):
Well, for now Bitcoin is hard at falling again. Nevertheless, I think that the idea that Bitcoin is digital gold makes more sense than that of a currency (despite all the grandiose projects like Bitcoin City Arnhem or Bitcoin Kiez). It is often noted that the time taken to confirm a transaction is too slow compared to real financial transactions. This may be too slow for many applications associated with a digital currency. But for a safe haven, or generally for transfers that don’t have to be instantaneous, it’s perfectly sufficient. In this respect, I agree that the main role of Bitcoin may be seen more in digital gold.
Now, however, the current price development shows that the calculation “negative political developments = bullish Bitcoin price” also goes in the other direction. This should also be borne in mind when considering a safe haven.