For years, the cryptocurrency industry has attempted to propagate a specific narrative around cryptocurrency, which is that it acts as a "safe-haven" asset, a way to park capital in the face of unpredictable, extreme market events, otherwise known as "black swan" events.
The theory could be seen as an argument from ignorance, because it was asserted that crypto was a safe haven primarily because that had not yet been proven false. Without a black swan event, it was easy to claim that cryptocurrencies like Bitcoin would remain stable in the face of severe market downturns.
In just the past couple of months, this has all been turned on its head.
In late 2019, articles came out about a "mystery pneumonia," including quotes that "there’s no need to panic" and that "it should be not serious [sic]." Soon, the virus spread, becoming an epidemic in China and now a global pandemic.
Investors have panicked, and perhaps rightfully so. The Dow experienced its largest drop since the 2008 recession, and entire industries are crashing down. For instance, the S&P 500 Airlines Industry Index has experienced a more dramatic decline than even after the 9/11 terrorist attacks.
Black swan events and viruses aren't new — after all, that's why they have names. We've seen them before, from the Spanish flu to SARS to the Great Recession.
The difference here is that COVID-19 may be the most impactful pandemic we've seen during the digital economy. More and more markets are reliant on the digital economy, and cryptocurrency is more deeply intertwined with the digital economy than anything else.
Without a history of a pandemic in the digital economy to look back to, it's anyone's guess as to how cryptocurrency investors will continue to react to the coronavirus. Without a doubt, the market hasn't seen the full impact of COVID-19 yet.
Unfortunately, cryptocurrency markets have reacted similarly to traditional markets. While true safe-haven assets like gold have remained relatively steady in value, Bitcoin is plummeting alongside its traditional market counterparts.
If the safe-haven narrative is broken, then what's the true narrative? The reality is, Bitcoin and other cryptocurrencies hold value outside of being a safe haven.
For starters, crypto is just the tip of the iceberg, representing the beginning of the blockchain industry. Investors might be shocked at Bitcoin's recent performance, but keep in mind that Bitcoin does not reflect the industry as a whole.
Other blockchain innovations, such as tokenized funds and "crypto for good" projects, march on, regardless of Bitcoin's volatility.
For the blockchain industry, this narrative shift is a good thing. The less of a focus on price, the better. The real narrative should focus on innovation and all the improvements blockchain can bring, rather than the ever-changing price.
This is all the more reason to shift our attention away from price for good. Of course, "innovation" is a vague term, and even more so in the blockchain world, so examples are called for.
We find examples aplenty from corporations to governments to startups. For example, Forbes lists 50 billion-dollar corporations innovating on the blockchain, counting giants from Amazon to Walmart. Governments from Dubai to Estonia have made blockchain a core part of their digital strategies.
Perhaps most importantly, everyday people are using the blockchain, and that isn't changing. Sure, price is still critical to pay attention to, and if you're going to invest, do it right and diversify, so you don't suffer from the immense volatility of a single asset, like Bitcoin.
However, price does not have to, and should not, dominate the blockchain narrative. In the future, I hope blockchain headlines will read along the lines of "You Can Contribute To Clean Energy With The Blockchain," and not "Bitcoin Price Is Up/Down."
We have a long way to go, but I believe cryptocurrency's status as a safe-haven asset being tested is helping, not hurting.
