Bitcoin, along with the wider cryptocurrency market, has crashed—dashing hopes the digital token had begun performing as a so-called safe haven asset. The bitcoin price is down some 10% over the last three days with many major cryptocurrencies, including ethereum, Ripple’s XRP, litecoin, and bitcoin cash, recording even heavier loses.
The price of bitcoin fell to lows of $8,520 per bitcoin on the Luxembourg-based Bitstamp exchange yesterday evening after touching $10,000 just last week and wiping around $30 billion from bitcoin’s value.
Bitcoin and the wider cryptocurrency market crash comes as global stocks go into meltdown due to the coronavirus spreading around the world. U.S. stocks look to be headed for further declines at Thursday’s open despite U.S. president Donald Trump making a bid to assuage concerns over the coronavirus outbreak.
Trump tapped vice president Mike Pence to lead the country’s efforts against the disease while saying the risk to Americans remains “very low” even as health authorities warned of community spreading following the confirmation of a first case of unknown origin in northern California.
The Dow Jones Industrial Average has lost more than 2,000 points this week, falling for the fifth day straight yesterday, along with the S&P 500. The Dow is, meanwhile, on track for its worst percentage-point weekly performance since 2008.
Bitcoin recorded a strong start to 2020, climbing back above the psychological $10,000 per bitcoin mark, first appearing to be boosted by geopolitical fears surrounding the escalating tensions between the U.S. and Iran and then apparently gaining on fears the coronavirus could knock global trade.
With bitcoin’s latest fall in the face of global market turmoil, the theory that it had begun acting as a safe haven along with gold and the Japanese yen is looking overblown.
“Bitcoin has been uncorrelated to other asset classes,” bitcoin and crypto analyst at Coinist Research, Luke Martin, said via Twitter.
“If stocks drop, this does not mean bitcoin has to pump. If gold prices climb, this does not mean bitcoin will rise with it every time,” Martin said, adding “narratives will come and go.”
“Bitcoin as uncorrelated has always been the narrative base case,” added independent crypto strategist Nathaniel Whittemore.
Bitcoin and cryptocurrency market watchers appear to have returned to assessing bitcoin based on its own metrics.
“Bitcoin’s value isn’t derived from the same indicators as fiat, such as interest rates and GDP,” said the chief executive of crypto social trading platform HedgeTrade, Dave Waslen. “Bitcoin is purely driven by demand which is why it often remains steady when other markets are teetering.”
Looking ahead into 2020, bitcoin traders and investors have a lot to feel bullish about.
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