As global equity markets crashed on Monday, bitcoin had the opportunity to prove it was the digital safe haven its proponents have always claimed it to be.
The complete opposite transpired, as bitcoin plunged more than 10% en route to fresh two-month lows. In the process, bitcoin threatened to dip below a key trendline support that could lead to more bloodletting in the near term.
The bitcoin price crashed more than 10% on Monday, reaching an intraday low of $7,689.00 on Gemini. The largest cryptocurrency by market cap continued to trade near session lows at the time of writing.
With the decline, bitcoin is on the precipice of a bearish trend reversal. A further drop below $7,881 could trigger a panic sale and leave holders exposed to heavier losses.
Twitter user Jayden Crypto says holders should “pray for a bounce” at current levels or “things are going to get ugly.” The trader shared the following chart on Monday:
At current values, bitcoin has a total market capitalization of $142.2 billion, accounting for 63.5% of the total crypto market.
While sudden swings in bitcoin’s price are not unusual, the recent selloff undermines the narrative that BTC is becoming a digital safe haven.
Bitcoin has been plunging alongside stocks ever since investors began pricing in the impact of coronavirus. To the naked eye, it appears that bitcoin is moving in lockstep with equities, making it a risk-on asset as opposed to a digital haven.
To be clear, bitcoin doesn’t usually move in the same direction as stocks. It’s not exactly correlated with gold, either. But its inability to attract bids in these extremely volatile times means investors aren’t hedging their bets with bitcoin – not even close.
Euro Pacific Capital CEO and bitcoin critic Peter Schiff took to Twitter on Monday to expose BTC’s apparent haven myth.
Schiff believes bitcoin stands no chance of ever displacing gold as the world’s preferred safe-haven. Gold futures peaked at $1,704.30 a troy ounce on Monday, the highest in around seven years.
For the time being, investors appear to be fleeing risk assets as coronavirus ravages the global economy. The latest stock-market selloff was stoked by Saudi Arabia’s decision to slash its forward crude prices after failing to reach a new supply agreement with Russia. Global energy producers are at odds about how to re-balance the market in the wake of the coronavirus shock.
The resulting crash in oil prices triggered a massive slump in energy stocks, causing the entire market to buckle.
Bitcoin is being dragged along for the ride, putting it at risk of further losses.
Disclaimer: The above should not be considered trading advice from CCN.com.
Last modified: March 18, 2020 2:58 AM UTC