On Monday, the 9th of March, stock markets around the world closed with major losses. In the US, the Dow Jones Industrial Average shed more than 2000 points, according to the BBC. In the same vein, the S&P 500 and NASDAQ fell 7.6% and 7.3% respectively. The UK and European countries’ stock market indexes also witnessed similar declines.
Analysts contribute this recession to the outbreak of the Coronavirus epidemic which halted manufacturing in China. Making things worse, recent talks between Russia and OPEC turned out to be pale and Saudi Arabia deliberately slashed the prices waging a war. The whole scenario resulted in the worst collapse of the market since the 2008 Global Economic Crisis and the day it happened was given the moniker, Black Monday. Contrary to this, Gold does what it always has and acted as a safe haven, the metal smashed seven-year high of $1,700 per ounce.
Enter the Bitcoin
Bitcoin has long been hailed as the digital gold and crypto-maximalists claims that it fills the void of the traditional stocks. The world’s first cryptocurrency was hardcoded with digital scarcity and the supply is limited to 21 million. This makes the asset similar to precious metals like Gold. Though other cryptocurrencies have followed the same knack, they were not able to pull the crowd and reach heights as Bitcoin did.
Bitcoin is a non-correlated asset which means that it does not move in any direction with respect to the traditional assets like stocks and bonds. A report by SFOX bolsters this argument of Bitcoin being a safe haven. In their analysis, Bitcoin did not correlate with both the S&P 500 and Gold in the year 2019. Moreover, the digital asset resulted in higher year-over-year returns and lesser volatility than its counterpart, Gold.
At the beginning of 2020, Bitcoin rose at a neck-breaking speed hitting the ten thousand dollar mark. A sudden drop in the price shattered the hopes of the crypto-savvy. The storm struck in the second week of March when Bitcoin lost a shocking 50% in a matter of two days. Alts also took the hit resulting in over $50 billion being wiped from the market. As of writing, BTC fell below $5,500 according to CoinMarketCap.
Sadly, this steep trend turned out to be in correlation with the global economic situation where the traditional market suffered from huge losses. It sparked the discussion if Bitcoin is really a safe haven. However, some related this blood bath to the Plus Token, a Ponzi scheme. Last Saturday, they sold over $100 Million worth of Bitcoin and flooded the market with bitcoins and sell orders. This has supposedly triggered the collapse of the market.