While no asset has proven to be a rock star during this tumultuous market meltdown, the Bitcoin price appears to be holding its own in the short-term. In fact, one might say that it is trading in an uncorrelated manner to stocks and bonds after it managed to eke out gains while every other asset class hit the skids as the U.S. government was pumping its latest stimulus package in response to the coronavirus crisis.
Most recently, BTC is meandering between positive and negative ground or trading flat but most importantly is holding onto the $5,200 threshold. It’s a positive sign while other assets have shown absolutely zero sign of hitting a bottom. Investors ran for the exits from stocks, bonds and gold today and didn’t look back while they managed to cling to Bitcoin.
According to Hunter Horsley, CEO at Bitwise Asset Management, nearly three-quarters of Coinbase investors were buying today. He pointed out the Herculean feat in a tweet in which he observed that Bitcoin’s ability to hold on occurred without the help of circuit breakers or government intervention to prop it up, which he simply described “impressive.” One day does not a trend make, but as Horsley pointed out in the Twitter thread, “we’re all watching daily.”
Incredibly, amidst unprecedented turmoil in markets, Bitcoin continues holding strong.
Down less than Gold, Equities, Agg bonds, and TLT today.
72% of investors on Coinbase buying.
24-hour, no circuit breakers, no govt backstop. Impressive. pic.twitter.com/EyKPbNZnuL
— Hunter Horsley (@HHorsley) March 18, 2020
One explanation could come down to the math. For instance, a wearied Federal Reserve as part of its latest stimulus package committed to daily $500 billion repurchase operations through Friday. Blockstream CSO Samson Mow puts it in perspective, placing Bitcoin’s finite nature on center stage.
The put this into perspective, everyday for the rest of the week, The Fed is going to inject 98 million #Bitcoins into the financial system. That's 4.6 times as many #Bitcoin that can ever exist, every day for the rest of this week.
— Samson Mow (@Excellion) March 18, 2020
While we are a long way from “moon,” Bitcoin restored hope among some investors as it became apparent that the cryptocurrency was finally beginning to trade independently of the stock market. Whether or not that sticks remains to be seen.
Given the black swan nature of the coronavirus pandemic, all bets have been off around uncorrelated asset classes. No asset has been safe from the herd’s move to cash, leaving Bitcoin and gold proponents left to lash out at each other about which asset was performing less bad. For those keeping score, chalk one up for Bitcoin today.
S&P 500 down 3.5%, gold down 1%, silver down 2%. Bitcoin up 3.5%.
— Tyler Winklevoss (@tyler) March 18, 2020
And while Bitcoin showed signs of decoupling from the traditional financial markets, altcoins were following their larger peer’s lead with several of the top-10 coins also finding green in the last 24-hour period.
Bitcoin may be down by a double-digit percentage on the year, but the investment environment is one that is shunning risk at the moment. And with its inherent volatility it’s hard to defend Bitcoin as a safe-haven asset. Yet with the catalyst of a Bitcoin halving event right around the corner, investors just might find there are more days in which the flagship digital currency ignores the crowd and marches to the beat of its own drummer.