At the beginning of the year, tensions between the U.S. and Iran reignited a debate about whether or not bitcoin works as a safe haven asset in times of heightened geopolitical uncertainty.

The onset of the coronavirus epidemic may have provided some guidance.  

As COVID-19 rocked the world and the U.S. markets, the bitcoin price trended right alongside them, appearing more like a risk asset than the safe-haven asset so many crypto enthusiasts hope it can be.

"It hasn't reacted the way people expected it to but it's also been a short window of time to measure its performance," said Teddy Fusaro, COO of the digital asset manager Bitwise. "This year it's still up about 25 or 30 percent, so if you zoom out a little bit you'll see something different. Bitcoin is so new, it hasn't been through a phase like this before."

Fusaro said it will take more time to see how the safe-haven asset narrative ultimately evolves, but that in the midst of the coronavirus crisis, his biggest concern isn't the price of bitcoin but rather, public trust in institutions and governments based on how they manage this crisis. In the meantime, it's safe to expect more price volatility. 

"After we're able to digest how we deal with this early phase of the crisis breaking out in the U.S., we'll have time to digest how it is bitcoin behaves relative to the capital markets," Fusaro said. 

The timing of the crisis presents a rare situation in which there might be a supply shock to the economy as well as a demand shock at the same time. 

That could translate to the behavior of the bitcoin price, with the upcoming bitcoin halving, a drop in the rate at which new supply is created, coming in May. 

In the current market environment, "we're likely to see lower, maybe even negative, interest rates in the U.S. and the narrative for sound money or buying something with a deflationary type of supply schedule could get stronger," Fusaro said. "Once a supply shock to the bitcoin market comes to market it'll be a dynamic to watch – a big dynamic for 2020 in the bitcoin market."

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