In brief
- A Crédit Agricole banker suggests the U.S. dollar is the “ultimate safe haven.”
- He points to its liquidity and market depth as being ideal for risk-averse investors.
- Bitcoin and other cryptocurrencies have recovered some losses since mid-March.
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Bitcoiners have long argued that their favorite cryptocurrency is a safe haven from economic volatility, but when the stock market tanked in mid-March as the coronavirus began its sweep across the US, so did the value of it and every other notable cryptocurrency.
Even gold, the original financial “safe haven,” suffered during the economic downturn. The crypto market has clawed back some of the ground it lost last month, but now the managing director of prominent French bank Crédit Agricole—the world’s largest cooperative bank—claims that it’s the good ol’ United States dollar that is actually today’s best safe haven.
“The dollar was and remains the ultimate safe haven,” said Valentin Marinov, Crédit Agricole’s managing director and head of G10 FX strategy, to CNBC. “We’ve seen glimpses of that returning in the last few days when the dollar managed to regain some ground.”
Marinov specializes in the G10 currencies, which are 10 of the world’s most-traded fiat currencies and includes the US dollar along with the Euro, Pound sterling, and seven others. He explained to CNBC that growing jobless claims in the US will continue to push investors away from risk in the short term, and that the US dollar provides what he sees as a more reliable option for investors.
“The treasuries are really offering a haven that is unparalleled in its liquidity, and the market is unparalleled in its depth,” Marinov added. “So long as investors worry about the economic impact of COVID-19 and that makes them more risk-averse, the dollar would be the place to go.”
Overall, his guidance isn’t very positive: like the International Monetary Fund (IMF) this week, Marinov suggests that the global economy is headed towards the worst economic recession since the Great Depression.
Even amid the (warranted) doom and gloom across the financial sector, the crypto market has been steadily recovering. The crypto market grew this week, recovering $15 billion of value in a single day as Bitcoin crossed $7,000 and other cryptocurrencies saw similar climbs.
But when Bitcoin tanked along with global markets in the middle of last month, the credibility of Bitcoin’s safe haven advocates may take a little longer to recover.