May was a great month for haven assets—and bitcoin

Mining glory.
Mining glory.
Image: REUTERS/Tyrone Siu
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Financial traders had plenty to fret about in May. There were warnings about the weakness of the global economy; the US-China trade war escalated; a new front opened in US president Donald Trump’s trade fights, this time with Mexico; the UK’s prime minister resigned as the Brexit clock kept ticking; and Turkey announced it was rerunning a crucial election in Istanbul, which was seen as another threat to democracy there. Accordingly, the VIX, a volatility index considered Wall Street’s “fear gauge,” jumped to its highest level since January earlier in May, and the S&P 500 dropped nearly 7% over the month, the first monthly decline this year.

All the while, bitcoin traders were unfazed and did their own thing. The price of the cryptocurrency surged 60% last month to more than $8,500. That’s the highest level in a year.

The bitcoin price is still more than $10,000 away from its peak, reached in December 2017, but the recent rally marks an end to the “crypto winter” that had seized hold of the market for more than a year.

While bitcoin traders were in a jubilant mood, other financial traders turned their worry into purchases of haven assets. The price of gold increased 1.8% last month. The price of government bonds deemed the least risky, those of the US and Germany, rallied. This sent yields on German 10-year bonds to a record low and yields on benchmark Treasuries to the lowest in almost two years. And the Japanese yen, often used as a proxy for risk, surged nearly 3% against the dollar.