Some cryptocurrencies surpass gold as quality store-of-value assets.

From crisis to cryptos: Assessing cryptocurrencies as store-of-value assets

Delving into the valuation of cryptocurrencies as stores of value, we explore their demand during crises, potential to gain market share from traditional safe-haven assets and the factors that contribute to their resilience amidst uncertainties.

This article is part of Sygnum’s Valuing crypto assets investment research report.

Store-of-value assets, such as gold, are not productive and do not generate an income. In fact, they attract a negative income, as they typically incur storage costs. The fundamental drivers of the value of these assets are supply and demand.

While supply and demand both fluctuate in the case of precious metals, the supply of cryptocurrencies is perfectly predictable, so valuing them as store-of-value assets hinges on estimating the demand.

The drivers of demand are partly the same for all store-of-value assets, namely the overall need for safe-haven assets based on the (actual or perceived) state of global or certain local economies and the financial system. Governments’ decisions to use certain assets as reserves also play a pivotal part.

When there is a high interest in safe-haven assets, the demand for both precious metals and cryptocurrencies can rise without a change in their relative market shares.

A second source of demand for cryptocurrencies as stores of value is taking market share from traditional safe-haven assets. This may be driven by an assessment of the qualities of the various alternatives or it may be simply a decision to diversify.

As safe-haven assets are by definition bought to provide security in a crisis, and the precise nature of crises is hard to predict, it makes good sense to use a combination of store-of-value assets.

When cryptocurrencies are assessed on the required qualities for a good store-of-value asset, some cryptocurrencies compare favourably to gold. Bitcoin in particular does better on scarcity, authenticity (difficulty to forge), portability, divisibility and storability than gold. It is similarly permanent but has lesser widespread acceptance than gold.



The valuation of cryptocurrencies as store-of-value assets involves an assessment of the overall demand for safe-haven assets and any expectation of the cryptocurrency taking market share from other store of value assets.


This document is purely for educational purposes and has been issued by Sygnum Bank AG. It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a marketing communication. It does not constitute an offer or a recommendation to subscribe, purchase, sell or hold any security or financial instrument. It contains the opinions of Sygnum Bank AG, as at the date of issue. These opinions and the information contained herein do not take into account an individual‘s specific circumstances, objectives, or needs. No representation is made that any investment or strategy is suitable or appropriate to individual circumstances or that any investment or strategy constitutes personalised investment advice to any investor. Therefore, you must verify the above and all other information provided in the document or otherwise review it with your external advisors. Some investment products and services, including custody, may be subject to legal restrictions or may not be available worldwide on an unrestricted basis. The information and analysis contained herein are based on sources considered as reliable. Sygnum Bank AG uses its best efforts to ensure the timeliness, accuracy, and comprehensiveness of the information contained in this document. Nevertheless, all information indicated herein may change without notice.

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