During economic recessions and time of high inflation, central banks might choose to print more units of the domestic currency, to give the economy a boost. This creates uncertainty in the forex markets. In the case of Bitcoin, however, the opposite is true. Bitcoin has a set limit of 21 million, established at the time the cryptocurrency was created. This means that there is no confusion regarding the demand and supply of the digital currency.
For some, using Bitcoin as a hedge against volatility might seem odd, given the volatile nature of the digital currency itself. However, hugely uncertain geopolitical and economic environments make traditional assets less reliable. We saw the crash of oil, a traditional safe haven investment, driven by the global pandemic-led lockdowns. The US dollar has also weakened significantly through 2020, while gold has been more volatile than usual. This has sent investors flocking to BTC, which emerged as a viable alternative to these traditional safe havens.