Is Bitcoin Still a Store of Value?

It depends on what you're trying to protect that value from. Market meltdowns like Monday's? No. Confiscation or monetary inflation? Maybe.

Bitcoin (BTC) took another hit on Monday as part of the broader market sell-off, which saw the S&P 500 and Nasdaq fall more than 4% each. BTC fell below $50,000 at one point during the day but later recovered some of its losses, trading around $53,000 by early afternoon in New York.

The sell-off, sparked by news of a potential class action lawsuit against Coinbase, comes after a period of relative calm in the markets. Last week, the S&P 500 and Nasdaq both hit record highs, while BTC hovered around $58,000.

But Monday's market sell-off has raised fresh questions about bitcoin's status as a store of value, especially in the context of a broader market sell-off like the one we saw on Monday. Some skeptics have argued that bitcoin's volatility disqualifies it from being a store of value, especially when compared to something like gold, which has been used as a store of value for centuries.

Others, however, have defended bitcoin's status as a store of value, arguing that it is still a young asset and that its volatility is to be expected. They also point to bitcoin's scarcity, portability, and lack of attachment to any government or corporation, which makes it an attractive asset to hold over the long term.

"Those who hold it for long periods of time, especially those who have concerns about … the national debt, central bank policy, all of these things … feel as if it's not so much bitcoin going up [that matters] but its denominator declining in value," said Andy Baehr, head of product at CoinDesk Indices.

Ultimately, whether or not bitcoin is a store of value depends on what you're trying to protect that value from. If you're looking for an asset that will hold its value during a day-to-day market sell-off, then bitcoin is probably not the best choice. But if you're looking for an asset that will protect your wealth from the long-term erosion of the greenback's purchasing power or confiscation by the government, then bitcoin could be a good option.

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