In what has arguably been one of the worst drops for bitcoin in recent history, the world’s number one cryptocurrency by market cap has fallen back down to where it was in late January.
Bitcoin Is Down for the Count
While some are quick to blame the panic surrounding the coronavirus, others are saying that separate factors are responsible. Tim Enneking – the managing director of Digital Capital Management – says that bitcoin spiked to $10,500 too quickly, and that what we’re experiencing now is all part of a “healthy” pullback. He explains:
The BTC plunge quite clearly has a variety of causes. The background cause was a healthy run-up to $10.5K in mid-February and an equally healthy pullback that had just about run its course. Near what would have normally been the end of that pullback, the Plus Token news hit, weakening markets that hadn’t quite yet begun to again show strength.
It’s hard to accept all these words as straight up facts. After all, the Plus Token news wouldn’t be likely to affect stocks and oil, yet these items tanked along with all the world’s major cryptocurrencies. How could an entire market meltdown occur at the hands of one crypto scam?
Yet, strangely, many analysts seem to agree with his sentiment. One such figure is Joe DiPasquale, the CEO of crypto hedge fund manager Bit Bull Capital. Last Saturday, DiPasquale mentioned that several of the Plus Token scammers may have cashed out as many as 13,000 units of the bitcoins they had stolen, thereby liquidating a huge portion of available units.
This, he claims, caused a panic amongst traders, which likely led to the massive drop we witnessed 24 hours ago. He states:
Concerns surrounding the sale of BTC from Plus Token did cause initial panic and the global sell-off also impacted market sentiment… The price falling below the 150-day moving average was a major setback, opening up lower supports at $8,000 and $7,800.
Enneking was also quick to state that this recent price slide places bitcoin along the lines of more traditional assets, thereby making its “safe haven” status relatively questionable. He explains:
The aspect of this drop, which is far more concerning than the drop itself, is the sudden, very high and direct correlation with fiat assets. This lowers the attraction of the crypto space as both an alternative to highly correlated fiat markets and damages the argument that crypto (and BTC specifically) is a ‘haven’ investment asset like gold.
Not Quite a Safe Haven?
Kiana Danial – CEO of Invest Diva – agrees, commenting:
Bitcoin should be acting like gold and a safe-haven during a crisis… The fact that both the crypto market and the stock market are dropping at the same time shows that many investors may not yet accept bitcoin as gold 2.0 as broadly during the coronavirus outbreak.
