Bitcoin’s 12% Drop Mars “Safe Haven” Status

Bitcoin’s 12% Drop Mars “Safe Haven” Status

about 4 years ago2 mins

With coronavirus fears giving stocks their worst week in a decade, investors have instead flocked to their trusty “safe havens” in times of strife. But cryptocurrency, it transpires, isn’t one of them… 😔

What does this mean?

Global stocks and commodities have suffered in recent days, erasing all their gains for the year to date – and then some.

Investors have instead turned to the relative security of dollars, gold, and government bonds: gold’s price is now up 9% this year, while US bond yields (which fall when demand and prices rise) have plunged to record lows. Look out for our imminent Pack on investing in those…

Things got even worse for stocks on Friday
Things got even worse for stocks on Friday

But while recession fears and the likelihood of interest rate cuts (where possible) grow, cryptocurrencies – hailed as recently as last month as a potential shelter from stock market storms – have failed to step up. Instead, the price of so-called “digital gold” bitcoin has, along with those of other major cryptos, fallen over 12% so far this week 😱

Why should I care?

While cryptocurrencies’ “corrections” look eye-catching, they’re not as significant as stocks’. Crypto prices are, after all, no strangers to volatility: the 3% daily drops shaking stock investors this week had already hit bitcoin six times since Christmas. And unlike stock markets, bitcoin is still up 20% in 2020.

Bitcoin’s price takes the rough with the smooth (Source: CoinMarketCap)
Bitcoin’s price takes the rough with the smooth (Source: CoinMarketCap)

What’s more, crypto prices likely weren’t helped this week by signs that inbound international regulations designed to limit bitcoin’s prized anonymity may cause cross-border blockages – as well as news on Friday that two major crypto exchanges were under siege from hackers 👩‍💻

Nevertheless, prominent claims that bitcoin could act as a gold-style safe haven when stock markets were spooked now appear to have been disproved – with one billionaire investor this week declaring bitcoin to be “uncorrelated”. But when traditional investments are going haywire, that’s not necessarily a bad thing…

Still big on bitcoin? Mingle with fellow Finimizers in our Premium Groups.

Finimize

BECOME A SMARTER INVESTOR

All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

Finimize
© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG