That’s because it signaled a recession, which tanked the stock market. It was just about a week ago that the bitcoin price rose in the wake of macroeconomics that sank the stock market. Observers cheered that finally the crypto was being seen as a safe-haven asset.
Considering that didn’t happen this week, it begs the question: What’s up with that?
CCN spoke to crypto observers to gather their thoughts about the factors that are mitigating bitcoin’s price rise.
Wednesday’s main yield curve inversion should have been massively bullish for bitcoin since it’s a major recession indicator. However, we saw the crypto’s price fall.
Igor Chugunov, CEO and Founder at Credits Blockchain, talked about bitcoin’s value growth in the wake of the trade war between the U.S. and China, saying:
“Taking into account the recent news background related to the U.S. and China trade war, most researchers were confident in the continuous growth of bitcoin value. Researchers are convinced that this trade war strengthens the role of the dollar in the global monetary system and also has a negative impact on other fiat currencies like [the] yuan.”
Chugunov added that the Chinese found the crypto to be a safe haven but are starting to leave as trade tensions have eased and pressure on the yuan has stopped. According to CNBC, Chinese officials hope to “meet the U.S. halfway” on trade issues.
David Martin, chief compliance officer and founder of Compliance Advisory Services, said that last week’s fleeing to BTC because of stock market declines was not an anomaly.
“[There] was little evidence to show that BTC is a safe haven based on yesterday’s stock market happenings because its price fell along with those of stocks. Yet, this is just one day’s events and we have yet to see how the inverted yield curve will continue to affect the crypto market.”
BTC is trading at one of the lowest points of the last month and considerably lower from its peak in June, Martin said.
“The repercussions of [Wednesday’s] inverted yield curve will continue to reverberate and reactions to hedge against new recession fears could drive new institutional and retail money into a decentralized and insulated asset like BTC.”
Mark Yusko, chief investment officer at Morgan Creek Capital Management, called Bitcoin a “chaos hedge.”
Martin noted that BTC was already in a pullback before news of the inverted yield curve hit.
“This could have just been the market pulling back from a recent rise coupled with the news of an inverted yield curve which sent prices lower. Pullbacks are good for long-term bull markets, and traditionally the BTC market has had several significant pullbacks over the course of longer term bull markets. The market has registered a bottom and new inflow of money has driven the price upwards from there.”
Tim Weiss is the CEO of DigitalBank Vault LTD. He said macroeconomic news is beginning to affect the bitcoin price more, but it’s still not a major influencer. He added:
“If you look at the price now, and think that a year ago BTC was one-third of the current value – around the $ 3,500 average – this is also a good investment too. That is the reason I am saying that the BTC is the best possible investment around. People are just shortsighted and cannot see the entire picture. When the price will be at $20,000 they will ask themselves why they did not bought at 10K.”
Last modified (UTC): August 15, 2019 15:27