The outburst of the novel coronavirus initiated an enormous sell-off in traditional markets. But, cryptocurrencies also dropped particularly. Due to this, several questions rose up about the status of the Bitcoin as a safe-haven asset.
Jump Ahead To:
Famous on-chain expert, Willy Woo
The main cryptocurrency, along with gold, maybe already on-going to decouple from traditional resources.
Will Bitcoin And Gold Turn Around?
Financial markets are in stress from the last month. Because the main catalogs and a few other commodities are suffering through serious losses, in such times, it seems that the investors will prefer to turn to safe-haven assets like gold. However, the Bitcoin is also assumed as an asset of the type. Basically, it is due to its negative association with traditional financial markets.
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Nevertheless, the aspect that many failed to account for was the importance of the disaster and the sell-off volume. The S&P, in addition to the Dow Jones Industrial Average, two of the most important indices of the world, reduced at the worst condition that it activated Wall Street circuit breakers halting trading for a particular time. In such situations, people prefer to change their properties into cash as a source of consistency. In this way, the liquid markets face loss. That’s why several people supposed the reason for the dump in both gold and Bitcoin.
Nowadays, though, Willi Woo, proposes that the decoupling of both gold and Bitcoin is already started.
In the charts that he selected, Woo makes a comparison in the performance of gold as compared to S&P in the duration of the 2008 financial disaster that of gold and Bitcoin compared to the S&P 500 now. He classifies two key instants, the flight to security point and the moment the decoupling, in fact, starts.
According to the Woo, the initial point manifested back at the start of March when
According to him, the first point manifested back at the beginning of March.
Definitely, on March 13th, we notice nearly all markets, as Bitcoin, move considerably. From this time, as Woo’s study, “after top distress, the finest resources for hedging the time’s fast increase in value (Gold 2008, Gold & BTC 2020).
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The Question: Is Bitcoin Really A Hedge?
It seems that Woo’s judgment is factually precise. There is one main adjustable that is answerable for it. These are unparalleled times for Bitcoin. The digital asset was not passed through a global financial disaster as in 2008.
Its performance was outstanding since it hit the market. But it is still uncertain whether or not it will perform as a hedge. Yet, it is also true that Bitcoin is extensively free. Its role is totally decoupled from any administration interference.
