Demand for safe assets is rising. There was no parallel in history. COVID-19, which has never seen before, has a significant impact on the global economy, which has also led to an increase in demand for safe assets. Judging from the situation in the United States, the epidemic situation has increased people's demand for preventive savings, and the situation in China is similar to that in the United States. From the perspective of income structure, the K-type economic recovery after the epidemic means that the proportion of wealth of high-income groups continues to increase. Under the background of rising demand for security, the expansion of wealth of high-income groups is bound to increase the allocation of security assets.

Treasury bonds are often one of the sources of "sense of security" in asset allocation, which has something to do with the bull markets in the past. At present, the yield of ten-year Treasury bonds in China is still at the quantile level of the last 30%. Even if there is room for price rise, the range may be relatively limited. Currencies of developed countries have always been regarded as an important target of overseas safe assets. However, in order to cope with the epidemic, central banks of all countries have "opened the floodgates" one after another, weakening the purchasing power of currencies.

What are the advantages of bitcoin? At present, only gold and bitcoin can meet people's demand for "security" in asset allocation, and bitcoin may have more advantages than gold. Bitcoin is not a currency in the full sense, but it is indeed an alternative asset for investment. At present, its market value ranks first among digital currency assets.

First of all, bitcoin's natural defect as a currency is its advantage as an asset. Bitcoin has the natural defect of fixed supply, which means that if bitcoin is used as a currency, it will bring deflation to the economy. But if bitcoin is used as an asset to resist the flooding of liquidity, fixed supply and predictability become one of its advantages.

Secondly, compared with physical assets such as gold, bitcoin in digital form is easy to carry and transfer, and has no high storage cost and relatively strong privacy. Finally, gold has basically withdrawn from the field of payment and circulation, while the scope of bitcoin payment is still expanding. It can be seen from the flow of funds that the funds invested in gold may be turning to bitcoin.

"Security" is not perfect. In fact, bitcoin is not perfect, and its biggest disadvantage is that it faces regulatory risks. Both the Federal Reserve and the Treasury have expressed negative views on bitcoin, the essence of which is to worry about its impact on the credit of the US dollar. As far as China is concerned, bitcoin is difficult to be popularized on a large scale, mainly because its benefits to the real economy need to be studied.

The market value is limited and needs to be mature. In summary, the global demand for security assets is increasing due to the impact of the epidemic, while the security provided by traditional assets is weakening. In this context, bitcoin, as an emerging alternative asset, plays an important role in resisting economic recession and flooding of liquidity.

However, it is worth noting that the bitcoin market has yet to mature, the regulatory measures are still not perfect, the current total market value is still small, and the price inevitably has the characteristics of high volatility. We need to be cautious about the speculation of leveraged trading.

(2021-4-21)