Safe-Haven Assets Gain as Market Turmoil Intensifies
As global markets face turbulence, Bitcoin, gold, and the Swiss franc are shining as safe havens. the Swiss franc climbed to 1.2500 against the dollar, while gold edged close to its record high at $4,017. Bitcoin, after a brief dip to $107,000, recovered to $112,800.
Despite a modest $4.5 million outflow from Bitcoin ETFs on Friday, the weekly gain stood at $2.7 billion. This brings the total inflow to over $62.7 billion, considerably higher than the $1.7 billion outflow from the SPDR S&P 500 ETF. Major U.S. stock indices fell over 2%,reflecting growing investor anxiety.
The Fear and Greed Index plummeted from 53 to 29, signaling increased fear. The VIX, a measure of market volatility, hit 23, indicating extreme fear. Demand for safe-haven assets and junk bonds surged.
These shifts occurred amid worsening U.S.-China trade relations.President Trump increased tariffs on Chinese imports, and China responded with export controls and tariffs.
Why are these assets considered safe havens? Bitcoin’s limited supply of 21 million coins makes it attractive. The supply on exchanges is at a multi-year low, with companies and ETFs buying more. Gold is also in high demand, with global central banks purchasing 900 tons this year, surpassing U.S. Treasury securities for the first time since 1996.
The Swiss franc’s economic neutrality and gold’s central bank demand further solidify their status as safe havens during market turmoil.
