Meltem Demirors Says Bitcoin Can Become A Risk-Off Asset

The CSO of CoinShares Meltem Demirors says Bitcoin can become a risk-off asset just as the geopolitical tensions are enhancing so let’s see what she had to say in our latest Bitcoin news today.

In the past few weeks, the geopolitical tensions in Europe escalated that it transitioned to an invasion of Ukraine from Russia. We saw most of the Western countries sanction Russia after its attack on Ukraine by means they had in their possession like exclusion from the SWIFT system and pulling out businesses from the country and cutting their economic ties and more. Cryptocurrency exchanges were asked to stop servicing Russian customers as well.

Amid the economic and geopolitical turmoil, Bitcoin and other cryptocurrencies were seen as alternative assets that are uncorrelated to traditional finance. Chipping in on the matter was Meltem Demirors who is the Chief Strategy Officer at CoinShares. Risk-on and risk-off assets have to do with the notion of risk sentiment and the current risk tolerance of investors for the current economic paradigm. In Risk-on situations, investors have quite the appetite for risk and bid up teh prices for some assets on the market. On the other hand, during risk-off situations, they become quite risk-averse and sell assets.

What assets they will sell depends on how risky they believe the asset they hold is. Therefore, the risk-on asset will be one of the riskier compared to a risk-off asset. Holding it could carry the promise of a better return but holding it amid an economic turmoil, can result in an even bigger downside. Speaking to Bloomberg, the Chief Strategy Officer of CoinShares, Meltem Demirors says Bitcoin can actually be a risk-off asset. She summarized the last few weeks and did limit the challenges to the war in Ukraine alone. She said:

“I think that it’s been a very interesting few weeks. Not only do we have this conflict happening in Western and Eastern Europe but we also recently had the Canadian truckers and their access to the banking system getting cut off. […] It was an instance where there was a lot of conversation around Bitcoin and cryptocurrency.”

She argued that there’s a growing awareness for the first time citizens that are becoming victims of wars fought by global superpowers but now they have a choice. BTC and other cryptocurrencies are non-political global money but we are not only seeing the increase in trading activity in both Russia and Ukraine but also a lot of the trading activity comes from the US with people donating for the people in Ukraine.

Demirors also explained that a couple of weeks is not enough time to prove the relationship but she is hopeful that the data from the next few months will establish the thesis.