South Korean experts say crypto currencies are a poor choice as a safe haven asset


On June 11, South Korean experts declared through the local media that crypto currencies are a „poor choice“ for shelter assets during the COVID-19 pandemic.

According to The Scoop, Professor Hong Ki-hoon of Hongik University stated that cryptoactives such as Bitcoin (BTC) should not be considered „safe haven assets“, at the level of gold, dollars or even US Treasury bonds. However, he does not deny that financial market volatility is causing more money to accumulate in the crypt market.

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Hong, from Hongik University’s Business Administration Department, says:

„To be a safe haven, two conditions must be met. First, the volatility of the asset value should be low, and second, the value should rise when market volatility is expected to increase. Therefore, crypto currencies do not meet the conditions.

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The professor argues the following regarding the reasons for the increase in cryptomontage volume during the coronavirus outbreak:

„The reason for the increase in volume after the markets fell was that the spirit of investing in higher volatility worked to compensate for the depreciated value of the assets.

Concern over lack of regulation in South Korea

The article also raised concerns about „market manipulation“. It states that the crypto environment is not sufficiently regulated in the country. They believe that the current popularity of the market does not alleviate the concerns of investors who are hesitant to buy cryptomoney.

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On the other hand, an anonymous investment expert quoted by The Scoop revealed that

„Individual investors are often unable to properly manage stock risks, but it is virtually impossible to calibrate the risk factors of cryptosystems. You have to understand them before you invest completely.

South Korea’s Ministry of Economy and Finance said on May 27 that it is preparing to amend the nation’s Income Tax Law, a move that could affect the profitability of crypts within the country.