Compared to all other assets, Bitcoin has proven far easier to liquidate due to the market functioning non-stop.
Bitcoin is often praised for being a deflationary currency with a clear limit on how much BTC can be in circulation. While this is undoubtedly its greatest strength, it also has another aspect which sets it apart from other asset classes — it is far more fungible.
Bitcoin — the Easiest Liquidatable Asset
One of the remarkable aspects of the cryptocurrency market is that it never sleeps. This also means it can never be shut down.
Because the cryptocurrency market operates 24-7, Bitcoin is by far the easiest asset to liquidate compared to all others. Compared to stocks, bonds, real estate, and gold, none of them offer this immediacy. This also means Bitcoin, as it matures, should be far more responsive to global trends than other assets as well.
Bitcoin has proven itself to be easier to liquidate than:
• real estate
All thanks to 24/7 final settlement and 24/7 exchange trading.
The smart money is learning this.
— Pierre Rochard (@pierre_rochard) March 13, 2020
Gold, most commonly touted as a hedge against uncertainty, does not possess this same perk. Instead, gold is kept in vaults which cannot be accessed immediately. Moving gold can also be expensive. Moreover, the spread for trading gold can be quite wide, especially when going through a broker-dealer, as one user mentions.
This is indeed very true. My gold/silver bars are in private vault but I can’t even access them now because the vault is in lockdown due to COVID19. The current buy/sell spread is also very wide.
— ⒿⒺⓈⒸⒽⒾⓁⒹ (@JeschildTan) April 4, 2020
Of course, 24-7 liquidity is not unique to just Bitcoin. All cryptocurrencies can be traded around-the-clock as well. However, what sets Bitcoin apart is that it has the most liquidity, by far, out of all other digital assets.
Soon to be Twice as Scare
The case for Bitcoin will become even greater once its block reward is halved in May. Analysts are predicting Bitcoin to break out new all-time highs sometime afterward. Recently, Morgan Creek Partner opined that we could see an all-time high by September.
However, with the coronavirus pandemic worsening, the future still remains uncertain. The digital asset markets have strongly correlated with the S&P 500 in the past two months, so traders will have to keep an eye on macroeconomic trends. According to analysts, we are now effectively in a recession.
After the halving, Bitcoin’s mining rewards will be cut by half and it will become that much scarcer. Historically, this has correlated with bullish momentum. So, after May, Bitcoin will not only be the most fungible asset—it’ll also be uniquely rare.
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