Bitcoin used to show little correlation with traditional assets, but the worst day for the US and European stock markets in three decades turned into one of the worst days for the crypto space.
Bitcoin Plummets to $3,858 on Coinbase
On Friday morning, many crypto exchanges saw Bitcoin tumbling to a daily of around $3,800, after which it quickly returned to above $4,000. On Coinbase, the king of crypto hit a daily low at $3,858, while on Bitfinex it stopped at $4,001. The last time when BTC was trading below $4,000 was in April 2019, so the cryptocurrency touched the lowest level in almost a year.
This is by far one of the worst weeks for Bitcoin. Since Monday, it has lost 53% to its recent bottom. Last Friday, it traded above $9,100, and has lost 58% since then.
However, most of the pain came yesterday, when bears tested one support level after another. Initially, Bitcoin fell to around $7,500, which was a strong support line of an uptrend that started to form in April last year. Once it broke below it, the price plummeted and ignored any logic. Bulls were crashed and the updating lows imposed traders to close their positions en masse, which fueled the panic.
Panic has been the norm this week not only for the crypto market. The stock markets also crashed to multi-year lows, with US and European indexes experiencing their worst declines in over 30 years. The trigger point of all this economic horror is the coronavirus outbreak that started in China and spread to Europe, South Korea, Iran, and other regions. The price war between Saudi Arabia and Russia has also had an impact, as oil prices crashed 30% on Monday, which was the biggest single-day decline since the Gulf War in 1991.
The crypto market couldn’t remain indifferent to the economic shock and has lost half of its value this week, falling to below $140 billion. It has lost over $90 billion in the last 24 alone.
What’s Next for the Crypto Space?
Bitcoin has never ceased to surprise us, even though it had previously shown wild spasms of volatility here and there. Giving a short-term prediction in such circumstances is ridiculous, but the coin should eventually revive when or if the global economy gets back on track.
Yesterday, BitMEX CEO Arthur Hayes said that he didn’t believe that Bitcoin would revisit the $3,000 territory and that the “max pain probably resides somewhere between $6,000 to $7,000.” Well, no one believed it but that just happened. Bears have been too strong. Bitcoin’s daily trading volume surged to new historic highs on Coinmarketcap, almost touching $69 billion.
Nevertheless, crypto enthusiasts haven’t lost their hope. Many Bitcoiners expect the market to return to growth.
No, Bitcoin as a store of value isn’t dead just because it had a super shitty day. No, Ethereum and defi aren’t dead just because they had a super shitty day. In the coming months the world will see what anti-fragile means.
— Erik Voorhees (@ErikVoorhees) March 13, 2020
The only major asset that could resist to this madness was gold, which has lost only 5% last week. That would delight Peter Schiff, but only for now.
Where do you think Bitcoin is heading to next? Share your expectations in the comments section!
Image via Shutterstock, Twitter @ErikVoorhees