The crashing and burning of bitcoin has left the currency in the dust, and many say they’re losing confidence in the asset, along with the industry that houses it.

Bitcoin Has People Questioning Its Abilities

At the time of writing, bitcoin has steadied itself somewhat and is trading in the mid-$5,000 range. This is a massive fall from where it was just last month, when it was trading for more than $10,300. For the most part, bitcoin has lost about $3,000 in just the last week alone.

The coronavirus has sent both U.S. and international markets plummeting to all-time lows. Bitcoin was trading for approximately $8,700 about a week ago, but the crash began on Sunday, and before we even knew what was going on, bitcoin had fallen into the mid-$7,000 range, losing much of its gains for 2020.

A few days later, it was trading in the low $6,000 range, and now – for the time being – appears to have settled at $5,400. This was a slight recovery from the high $3,000 range it had dropped to approximately 48 hours ago.

Mike Novogratz – a bitcoin bull and hedge fund manager – says that this is leading many to question whether bitcoin had ever qualified as a “safe haven” and believes that many are beginning to lose confidence in cryptocurrencies. He explains:

[Bitcoin] was always a confidence game. That’s all crypto is, and it appears global confidence in just about anything has evaporated.

To be fair, however, it’s not right to simply point the finger at bitcoin and label it as the only failing asset in the financial space. Traditional stocks have been hit hard as well, with the Dow having fallen by several thousand points over the past few days. Yesterday, it began to show signs of recovery and rose by 2,000 points after the coronavirus was declared a national emergency by President Donald Trump, but the markets are still stuck in a lower place.

Mati Greenspan of Quantum Economics explains in a recent newsletter:

The crypto market, after taking a massive hit yesterday, is also extremely fearful right now.

This Is the Ultimate Test

Jean-Marie Mognetti – a chief executive at Coin Shares – believes that this is all part of a larger test for bitcoin and believes now will be the time for it to show its resilience and durability. He explains in an interview:

We are seeing a global re-pricing of everything – from oil, to stocks, to bonds, to treasuries, and yes – even bitcoin. We believe bitcoin is a risk-off asset trading momentarily as risk-on, like other assets that have historically been viewed as risk-off are trading in legacy markets. The months and years ahead, as we look at a negative interest rate environment and significant levels of quantitative easing across the globe, will be bitcoin’s true test.

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