Investors Move to Bitcoin as World Markets Tumble
As global markets tumble and world economies lock down, Bitcoin is catching a bid. Is this Bitcoin's moment to shine as the next de-facto safe haven asset? Is Bitcoin destined to become the "digital gold" we have heard about for years?
One thing is for sure, Bitcoin is finally being tested in its first economic crisis. Bitcoin was born during the Great Recession, which began in 2008 and lasted for 18-months. The current economic situation, the result of lockdown orders following a pandemic, could be much longer lasting. Investors have fled to gold, which has crested above $1,600/ ounce. Bitcoin has trailed this performance, but there is evidence of investors moving into Bitcoin as markets plunge.
The current COVID-19 pandemic crisis is far and beyond any other economic crisis we have seen before. Health and economic corners and controls are at odds with one another this time, and the solutions to our problems is more than just a fiscal stimulus. Half of the World's population is on lockdown, with a variation in quarantine protocols in effect. Economic activity has slowed, and the Dow Jones Industrial Average (DJIA) has fallen 30% in 2020 YTD and most major indices have fallen as well. There has not been a market floor yet, and the DJIA is down 476 (4%) today.
According to the IMF, this is an unprecedented event. Countries around the World have shut their economies down, and stock indices have reflected this. The unemployment report reflected 6.6 million new unemployment insurance claims in America, potentially raising the unemployment rate to 13%. Projections of Q2 GDP show a reduction in economic activity and a projected unemployment rate of up to 30% in Q2. This is a massive reduction and blow to our current economic system.
Bitcoin was sold off initially, but rallied 15% to $7,200 and has retreated 5% to $6,800. This move show investors have considered Bitcoin a "safe-haven asset" amidst the chaos. Bitcoin sold off as investors took profits. The move from equities to Bitcoin is occuring. As the DJIA has fallen 4% today, Bitcoin has risen 3% and its market dominance is 66%, showing new capital inflow. Gold and Bitcoin are the safe haven assets the World will seek to own during these turbulent times. We shall see if Bitcoin lives up to its "digital gold" namesake.
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Also published in my Hive.io account I own under Anarchy999.
Picture from Pixabay.
https://www.cnbc.com/2020/04/03/coronavirus-way-worse-than-the-global-financial-crisis-imf-says.html
https://www.cnn.com/2020/04/02/economy/unemployment-benefits-coronavirus/index.html
