Investors were shaken as fear gripped the equity markets around the world. US stock markets experienced the first circuit breaker since the financial crisis in 2008. The main financial indexes in the US closed down by more than 7%. The Asian stock markets also experienced a similar fall as Japan’s Nikkei fell 5% from its previous close while Thai’s SET plunged 8.6% as Monday ended.
There has been a narrative around Bitcoin being a safe-haven asset similar to gold, but that might have just got proven to be false as after four-day consecutive red candles, Bitcoin lost more than 16% of its USD valuation. Gold, on the other hand, spiked up to test $1,700 per once before managed to close the day with a slight gain.
Ron Paul, a former Goldman Sachs’ hedge fund manager and CEO of Real Vision, has pointed out that hedge fund may be dumping BTC as the Value at Risk (VAR) rises and the fund managers have to sell off some of the speculative assets, including Bitcoin, to reduce risk.
Brian Armstrong, co-founder and CEO at Coinbase was intrigued by the recent price movement to the downside as many Bitcoin maximalists believe the orange coin was built to withstand a financial crisis.
Nevertheless, even with the recent sharp drop in Bitcoin’s price, mitigating most of its yearly gain so far. According to the data on Barchart, Bitcoin is still up more than 10% YTD similar to a safe-haven asset like gold, which sees almost 10% gain YTD. Comparing to the indices of equity markets such as S&P500 and Dow Jones, Bitcoin still fair better than these traditional investment vehicles as both have lost 15% and 16.4% respectively since the beginning of the year.
As the Halving is coming up in two months, which means the new supply of Bitcoin – known as the Block Reward, will be cut in half. PlanB, a famous analyst for his Bitcoin stock-to-flow model still believes that the deflationary nature of the cryptocurrency will make it hits $100,000 per coin sometime after the upcoming halving.
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