Bitcoin, altcoins, and global equities have all seen some intense bearishness today, which has primarily stemmed – at least in the case of the traditional markets – from fears surrounding the rapid spread of the Coronavirus across the globe.
The fact that this selloff has transcended just the traditional markets and has had impacts on niche markets, like crypto, has led some analysts to note that Bitcoin and altcoins may, for the time being, correlated to the US equities market.
Despite this, one analyst is noting that the crypto market’s intense selloff today is not rooted in that seen by the US stock market, but rather from its status as an emerging market that is driven primarily by investor’s emotions rather than fundamental developments.
Bitcoin’s “Safe Haven Asset” Narrative Disrupted by Today’s Selloff
Bitcoin’s status as a potential safe haven asset has long been debated by investors and analysts alike, but today’s selloff seems to invalidate this notion.
If BTC were a safe haven asset, an event like the rapid spread of the Coronavirus would be a bullish catalyst, as investors would shift funds from traditional markets into uncorrelated ones like Bitcoin.
Some investors have now noted that today’s BTC selloff is due to it forming a correlation with the traditional markets, but one analyst is noting that both notions are categorically false and that BTC is being driven primarily by investor emotions at this point.
“I said I would take off for a couple of days, but all this talk about btc’s correlation to stocks on twitter has me a little annoyed. There is no correlation. One market is bullish consistently making new highs, while the other is downtrending in a risk on environment,” AMD Trades explained in a recent tweet.
1/3 I said I would take off for a couple of days, but all this talk about $btc’s correlation to stocks on twitter has me a little annoyed. There is no correlation. One market is bullish consistently making new highs, while the other is downtrending in a risk on environment.
— AMD Trades (@Amdtrades) February 24, 2020
AMD Trades further goes on to explain that it still remains unclear as to where BTC fits into the equation when it comes to global markets, as its nascent nature and relative youth make it impossible to determine whether or not it is actually a safe haven investment, or if it has any correlations with assets like gold or equities.
“Even gold has been pushing higher so what does that say about where Cryptos fit into the equation? It doesn’t say anything. btc and blockchain technology is purely speculation because we don’t know where it will fit into society long and the market is purely driven by fomo,” he explained.
2/3 Even gold has been pushing higher so what does that say about where Cryptos fit into the equation? It doesn’t say anything. $btc and blockchain technology is purely speculation because we don’t know where it will fit into society long and the market is purely driven by fomo.
— AMD Trades (@Amdtrades) February 24, 2020
In the near-term, it does appear that Bitcoin’s price action is largely being guided by its technical structures, and its ongoing downtrend could suggest further losses are imminent if bulls are unable to defend its near-term support.
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