From 7,200 euros to 3,200 euros. In one night. Those in progress will also go down in history as the black days of bitcoin, which in a few hours has lost half of its value (to then go back a bit), sinking to the lowest point of 2020. But the mother of all Cryptocurrencies also suffered the most sharp drop in seven years, after concerns about the spread of coronavirus triggered a rapid surge in sales of junk stocks and bonds and, consequently, cryptocurrencies.
This wiped out a year's earnings, causing prices to drop to the lowest level since May 2019. Not only that, the event also undermined the dominant narrative that the mother of all cryptocurrencies should be considered a good-like safe haven asset treasure and gold. But what happened? Did bitcoin really lose value just because of the coronavirus? And above all, someone had foreseen it? Let's go in order.
What happened?
According to the figures, between 12 and 13 March the market capitalization of bitcoin decreased in one day by 48.3 billion dollars, falling from 137.8 billion to 89.5 billion (source: Coinmarketcap): the collapse more extreme and sudden since 2013. In the afternoon of Monday 16 March, the value rose to 5,100 dollars, more than 50% less than its maximum of 2020, 10,500 dollars, reached less than a month ago.
According to experts, this means that 2020 earnings have been completely wiped out. Bitcoin in practice did not resist its first pandemic (the H1N1 in 2009 touched it only, having just been born).
Exegetes of cryptocurrencies just did not expect it: but the uncertainty due to the impact of Covid-19 on traditional markets caused a sale of the most risky activities, including bitcoins. The fact that several American countries and states have declared a state of emergency has pushed many people to make cash, getting rid of cryptocurrencies: although bitcoin is indicated as a safe haven asset, to date it has not convinced the market that it can be a currency. exchange useful to purchase essential goods in times of crisis.
The collapse began when the United States suspended all flights from Europe. If it is true that China is coming out of the epidemic that, for a short time, has brought its economy to its knees, South Korea is still grappling with the virus (although for a few days in the country, as the Seoul authorities have announced, there are more healings than infections). And Korea is the third country in the world for the use of bitcoin, also accepted in some important chain stores, and by far one of the countries with the most use of cryptocurrencies in the financial and speculative fields. Among other things, just in the days before the collapse, the government of Korea has approved a new specific regulation for cryptocurrencies, which implements the recommendations of the G20 Financial Action Task Force (Fatf) and which will allow the authorities to monitor the cryptocurrency sector according to the global anti-money laundering (AML), anti-terrorism (Cft) and Know-Your-Customer (Kyc) guidelines.
But in reality this is not said to have affected. The oil war According to Forbes, the shock given to the markets by the drop in oil prices may have had an effect. “Saturday - the newspaper wrote - the bitcoin had seemed ready for a rally, going up to $ 9.192 before starting its constant descent.
Meanwhile, oil prices plunged 30% yesterday after OPEC members, led by Saudi Arabia and Russia, failed to agree on deeper production cuts to compensate for the weaker demand caused by the coronavirus epidemic. , actually sparking a price war. "
According to many experts, the bitcoin sell off was however caused by the architects of the PlusToken scam that attempted to recycle 13,000 bitcoins, stolen a few months ago by a group of unwary investors. The news that such an amount of cryptocurrency was about to arrive on the market, could have generated a first wave of panic with consequent mass sales of bitcoins, causing the price of several hundred dollars to plummet in a few hours.
Nothing new under the sun: every time PlusToken wallets download bitcoins and start selling, the market price is affected. Unfortunately, this time the recycling activity took place at the same time as the threat of coronavirus loomed on the horizon. This would have (the conditional is a must) gave way to the disaster. Did anyone foresee it?
Well yes: Andreas M. Antonopolous, entrepreneur and lecturer of the sector, two months ago asserted: "What people don't understand is that, at least at the beginning of a crisis, cryptocurrency markets would also collapse. The reason is that the investments of many venture capital firms, as well as a large number of companies and individuals, are based on expendable money, on excess liquidity in the portfolio. And like any other sector of the economy, even the cryptocurrency sector would dry up. "
On March 5, Andrew Bailey, governor of the Bank of England, also said that anyone who invests money in bitcoin should be ready to lose everything: "Whoever wants to buy bitcoin should be ready to lose all his money ... It has no intrinsic value". He had said similar words even in December 2017, before the bubble burst.
Last but not least there is the economist Peter Schiff, who in a tweet on March 3 warned: “If bitcoin does not rage even after an emergency reduction of 50 basis points in the interest rate, not to mention the recent volatility of the equity, bond, currency and gold markets, under which circumstances will its price rise? And if it doesn't increase ... why own it? The answer to this question is only one: to sell. Be careful!".
