Bitcoin grew up in the era of post financial crisis of 2019. As the traditional stock markets crumble around the crypto, bitcoin is put to its first real test since its inception.
It is widely believed that the crypto market has no correlation with any other asset classes and definitely not the presumably risky oil stocks or high-yield bonds but right now, the crypto market is also bleeding along with traditional stocks market.
″$20 oil in 2020 is coming,” wrote Ali Khedery, former Exxon’s senior Middle East advisor and current CEO of U.S. based strategy firm Dragoman Ventures, in a tweet on Sunday.
On the day when oil prices crashed by a fifth and there is a bloodbath in stock markets, investors flock towards safer options called “safe havens” to park their money. Gold is widely considered an investor’s ‘safe haven’ but people in the cryptoverse also relate bitcoin to gold as the leading cryptocurrency is also called ‘digital gold’.
But the truth is that bitcoin lost 10% in value while the crypto market collectively lost $23.5 billion in the last 24 hours, that can be seen from coinmarketcap data below.
On the other hand gold raked up and posted a 7 year-high early on in the day as the asset touched $17,00 an ounce for the first time since December 2012.
China consumes 22% of the world oil but the coronavirus outbreak in the country crippled it’s economy that resulted in less oil import for the country. The global economy was always believed to be heading towards another recession but with the ongoing coronavirus epidemic, coupled by Russia refusing to cut oil supply due to decrease in demand, escalated the situation that is believed to be worse than the economic crisis of 2008-09.
Majority of other cryptocurrencies also known altcoins posted double-digit percentage point losses. Ethereum the second biggest crypto fell 10.56% while Litecoin, also known as “Digital Silver” fell 14.38%.
It is true that crypto market has always been extremely volatile and witness large price fluctuations which is one of the reason it still has not seen institutional investment. Many people in the crypto space consider this an opportunity to buy bitcoin which is touted to replace the existing financial structure.
“For those who have long term investment horizons, bitcoin is absolutely a buy during these dips,” Jehan Chu, co-founder of Kenetic Capital, an investor in blockchain start-ups told CNBC. “We can expect more of this volatility sparked by macro health and financial shocks, but ultimately long term investments in the digital future and it’s key asset Bitcoin will be a winning strategy”
Bitcoin came after the global economic crisis of 2008-09, in just over 10 year period the digital asset has progressed so much that it is being discussed and vastly debated for new regulations related to digital currencies. It is true that technological advancements have progressed us over the years, but the current economic system is now in dire need of another step forward and many consider bitcoin that very step.