As markets tank, bitcoin rockets past $3700; is it the new safe haven?

Other cryptocurrencies too have been rallying alongside bitcoin. The total market cap of cryptocurrencies has reached a record high at USD 132 billion, as per coinmarketcap.com.

Since the start of 2017, bitcoin has rallied over 280 percent against the US dollar, while the total cryptocurrency market cap has rallied over 670 percent.

Bitcoin prices got a new lease of life following a 'hard fork' on August 1 that split the currency into two: bitcoin classic and bitcoin cash. (Bitcoin classic is the price that is usually referred to when talking about bitcoin price.)

However, lately, price of the newly-born bitcoin cash too seems to have now stabilised: it was last trading at USD 330.

Bitcoin's closet rival in terms of market cap, ethereum, was steady at around levels of USD 315.

The new gold

This rally comes at a time of major geopolitical uncertainty where equity markets across the globe saw heavy sell-off since the start of the week.

The tension between the US and North Korea has scared investors, who are now looking into shift their money to safe haven investments like gold and the Japanese yen.

Some experts suggest cryptocurrencies are now becoming a 'flight to safety' asset, which performs well during times of global turmoil.

This is buttressed by the belief that being decentralised and lacking any government oversight, bitcoins may remain immune from conflicts between central authorities.

However, unlike traditional safe-haven assets such as many currencies and even gold, bitcoin and other cryptocurrencies can be very volatile.

As of today, the volatility of bitcoin remains 14 times that of gold.

Source: buybitcoinworldwide

In particular, since the start of the conflict between US and North Korea, the volume of bitcoins being bought with the South Korean won (KRW) has increased several times. From 1 percent in February, volumes in the Korean won-bitcoin trade pair has gone up to nearly 20 percent, according to coinmarketcap.

Whereas, Korean won makes up more than 40 percent of ethereum trading volume, the highest among currency pairs.

Experts are still divided over the mysterious nature of virtual currencies and the dizzying rally they have seen, with some believing them to be a fad, a bubble or a ponzi scheme.

But cryptocurrencies have found themselves of immense utility in countries such as Venezuela, currently facing an economic meltdown.

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