Cryptocurrencies have not been used as a safe haven amid challenges the global economy has faced at the beginning of the year, one expert says.

The world has already seen a slew of market-shaking events this year including trade policy uncertainty, geopolitical tensions and the coronavirus epidemic, among others. With investors around the world struggling to find safe haven assets to insure themselves against potential crises, it was anticipated that many would turn to Bitcoin (BTC) and other digital currencies.

Doubts of crypto’s capabilities

However, some industry experts say that digital currencies have failed to serve as a safe haven. In a recent interview with Cointelegraph, Campbell Harvey, a professor of international business at Duke University, said that people value cryptocurrencies for transactional purposes and speculation.

“When you start talking about safe haven, it becomes really difficult to think are these really safe-haven assets because it's just not obvious,” Harvey said, suggesting that much of the value that is attributed to cryptocurrencies is essentially speculative.

Elaborating further on the matter, Harvey referred to a major sell-off in the stock market when the prices on consecutive days dropped by 3%, adding:

“Now, if these cryptos were safe havens, then you would expect maybe no change in their value or maybe even an increase in value. But that's definitely not what we've seen. The cryptos got battered and dropped by more than 10%. So that suggests to me, in a particular situation of great stress where people are realizing that there's systemic risk unfolding, the stock market drops as expected, people flee to safe assets, but they didn't flee to cryptos, they fled to the U.S. 10-year bond.”

“We’re already in a recession”

Harvey went on to speak about the inverted yield curve, which, according to him, precedes recessions. He suggested that the recession will be very severe, with people de-risking their portfolios by liquidating some of the cryptocurrencies in the face of the current coronavirus threat:

“We were already in a slowing growth situation and already headed for what might be a mild recession or just a slowdown. So given what we've seen in terms of in many cities, many countries where economic activity is basically stopped. So it could be that we're already in a recession.”