Bitcoin is gaining popularity as a safe haven asset. This is especially true in countries with high inflation. Why is bitcoin attractive as a hedge against inflation? Is such a shelter safe and if so at what cost? And if we take countries with moderate inflation or where there is almost no inflation, then how does the first cryptocurrency fare in this role?
Bitcoin does not always justify its feasibility in terms of use as a risk hedging instrument. Firstly, this is because the asset is not underpinned by anything other than market reputation.
The parallels with gold are incorrect here, since the precious metal is an exhaustible resource with comprehensible pricing. Secondly, the BTC price is subject to rapid and dramatic fluctuations associated with market emotions. For a hedge there must be price stability and predictability, at least in the short term.
Again, if there are challenges facing the flagship cryptocurrency as a hedge, this is the case since not all countries with relevant financial history allow the use of cryptocurrencies. For the time being, this is a very limited list.