Bitcoin is a lot of things to a lot of people. Including a hedge asset against all others, even precious metals.
Bitcoin is a hedge to this. https://t.co/cYlW1GkrWN
— Tyler Winklevoss (@tylerwinklevoss) March 15, 2020
The Corona Curse
Bitcoin undoubtedly took a huge hit recently. The cryptocurrency shed multiple thousands of dollars on its unit price as traditional markets also dived hundreds of points.
It seems when people are running scared, they may not be turning to Bitcoin as the ultimate safe place after all. They may be selling it and providing little demand for it just as everything else.
The Coronavirus has spooked people across classes, and they’ve reacted in different ways. Stock markets have tumbled, while even Bitcoin couldn’t stand up to the pressure, and lost a huge amount on its price.
While some people were raiding their local stores for toilet paper, others were putting hard-sell pressure on Bitcoin markets, sending the price in a downward spiral.
Move over bitcoin, seems toilet paper is the new currency. ?#CoronaVirus #CODVID19 pic.twitter.com/uBT7gLzGv3
— Joanna Justice? (@unikgirl11) March 14, 2020
But you have to go back to the fundamental reason that Bitcoin is valuable to see why it may, in fact, be a hedge against these Coronavirus times.
My local banks have been closed to regular business. Some have drive-thrus with limited hours. More and more banks are putting limits on things like withdrawals. Meanwhile, the federal reserve is injecting huge sums of cash into the economy, and it looks like more is on the way.
Things like this should, in theory, jump the price of BTC, but the general toilet bowl atmosphere of the economy recently hasn’t allowed for any such thing. Instead, Bitcoin has seen fantastic drops.
Hedge Asset
Bitcoin can act as a hedge against many things, but it seems the coronavirus has proven to be one thing that can affect most everything. People everywhere are losing wages due to canceled work schedules, and the stock market has no good news to bear either. It seems everyone, at every step of the social ladder, is affected in some way by corona.
Who knows how the price of Bitcoin and other cryptocurrencies will fare as the death toll from coronavirus rises. It seems the tragedy of the thing is that Wall Street and other financial centers seemed to be waiting on this emergency to exit in quite the fashion they did. The years-long bull market was erased in a matter of days.
Back in the beginning of February, Forbes writer Billy Bambrough wrote that Bitcoin’s price could explode as a result of the Coronavirus. We’ve yet to see anything like that. In fact, we’ve seen a sharp decline in the price of BTC, sharp enough to signal a bear market is in the house.
Bear market or not, others are calling for a months-long recovery for BItcoin. At time of writing, Bitcoin was struggling to stay above $6,000. Some believe the bottom is more like $3,000 or less, but things have been trending in the opposite direction.
So, is Bitcoin a hedge against coronavirus? It seems probably not at this point. It’s a hedge against most anything else, but the virus seems to have ripped through all kinds of markets with relative ease, cryptocurrency included.
