Having started dropping in price since Monday, first falling below $10,000 and then below $9,000, Bitcoin has finally stopped the bleeding with the coin able to stick above an important floor of $8,500. However, the recent losses have more than wiped out the February gains and have left Bitcoin’s apparent bullish run reeling.
More than that, Bitcoin has also had its safe-haven status questioned as the fall in its price has mirrored a vast fall in stocks and global markets, which is due to the increased spread of the coronavirus, which is wreaking havoc on the World’s economies. Bitcoin had been talked about as a hedge in economic uncertainty, but in this instance, it has failed.
Meanwhile, the only asset that is profiting in a time of mass shedding is the traditional safe-haven asset, gold, which has seen it soar within striking distance of $1700 an ounce at the onset of the week – its highest level since February 2013, as rising Coronavirus fears sparked a rush for safe-havens.
In the markets, the Dow Jones Industrial Average closed with a decline of 1,100 points (4.4 percent) and is down more than 10 percent for the week. The Nasdaq Composite also fell 4.6 percent to 8,566.48 and the S&P 500 suffered a similar hit, dropping 4.4 percent to close at 2,987.76. The effect of the virus cannot be understated as this drop at the end of the week is said to represent the largest daily decline in recent history.
Bitcoin drop linked to Coronavirus?
While Bitcoin’s price drop came at a time when there was renewed fears around the spread of the Coronavirus and its increased effect on the global markets and economies, it is unlikely that the Bitcoin market was reacting to the news.
Bitcoin as an alternative asset does not have the same links and ties to the economy, and has, in fact, showed no correlation – or even reverse correlation – to falling markets before. It would appear as if another factor is behind the drop, and likely it is just coincidental timing.
This is good news in a mid-term view for Bitcoin as the current market situation is unpredictable and shrouded in confusion as the coronavirus continues to spread with mixed predictions for its life cycle. Bitcoin, on the other hand, is possibly strong enough to bounce back from this price correction and grow as the virus continues battering the market.