The threat of the Coronavirus on the global economy is starting to get serious as a fresh wave of the epidemic sweeps the globe. A fresh outbreak in Italy has sparked fears that the virus could cause an economic standstill.
This fear has been translated to markets in the US as well, with the country gearing up for a potential outbreak on its shores. Stocks have been on a downward trend for two days now and it appears as if investors are already bracing for the worst.
In among this, the price of Bitcoin has also been struggling as it now sits at little over $9,000 having tipped $10,000 less than a week ago. The concern is that Bitcoin was being hailed as not only a haven in the threat of a recession, but also in the face of an economic standstill from the virus.
This looks to be a falsehood now as Bitcoin’s price is also suffering at a time when safe haven assets should be thriving. Many have likened Bitcoin to a digital gold in times of crisis, but gold is the only asset that is doing well currently.
Bitcoin’s safe haven status
In the past, there have been a number of catalysts in the geopolitical space that have caused stocks and traditional markets to take a dip, and the resulting effect for Bitcoin has been positive. This was seen most recently when the threat of a US-China trade war loomed.
Additionally, with many central banks enacting policies to try and prop up their suffering economies, investors have been seeking out safe haven investments in the fear of a recession. This too has been positive for Bitcoin as it often correlated to gold.
The coronavirus fear was another area that looked to be boosting Bitcoin’s safe haven properties in the early stages of the outbreak, but as the virus has now started affecting the global markets negatively, it is concerning to see Bitcoin also dropping.
It may well be that Bitcoin has certain properties that make it a safe haven, but its broad scope which lends it to being anything from a currency to an asset makes it hard to categorize. It is also still a very nascent market and for it to act wholly one way or another seems unlikely.
Bitcoin can, of course, offer safe haven investing in certain instances, however, it still is a highly volatile asset which is one aspect that does not wear well for long term success. While Bitcoin has for its majority been on an upward trend, it can dip widely, and at times when many do not expect it to.