Bitcoin is not a True Safe-Haven Asset like Gold

Bitcoin is going down while gold has jumped higher after Trump and his wife has tested positive for Coronavirus. It doubts the fact that Bitcoin is not a safe-haven asset like gold in times of economic uncertainty.

Global Markets Suffer after Trump had tested Positive for COVID-19

Trump tweeted that he and his wife Melania Trump had tested positive for COVID-19. After this news, global stock markets started going down, especially the US equity markets. For instance, the S&P 500 went down by 2%, while the Australian ASX plunged by 1.35%. But the gold did not follow stock markets and acted as a hedge asset as it jumped over 1% high.

Bitcoin, on the other hand, has performed opposite to physical gold. Currently, its price value is standing at $10,540 after decreasing by 3.14% since Trump’s tweet about Coronavirus. Not only Bitcoin, but the whole crypto markets are also presenting a bearish trend.

Bitcoin’s today move proves that it is a risky asset but not a pure safe-haven asset like gold. Bitcoin did not show correlation with gold but with the US equity markets. After World Health Organization declared Coronavirus a pandemic in March, Bitcoin crashed in price following global markets. Similarly, many times, it has not proved a true hedge investment. A Twitter user said:

“I think, once and for all we can all agree that BTC is not correlated to gold and is correlated to equities, no chopping and changing whenever it suits our bias, this is how it is now.”

Two Bad News for Bitcoin

But Bitcoin price is also affected after the Commodity Futures Trading Commission (CFTC) charged three owners of BitMEX for running an unregulated Bitcoin derivatives exchange. After CFTC’s allegations, $335 million has been withdrawn from the exchange. For sure, it affects the Bitcoin price. Besides two bad news, it is still trading above $10,000. Crypto analyst Joseph Young stated:

“The BitMEX charges and Trump contracting COVID-19 couldn’t take Bitcoin below the $10k level even briefly. The resilience of Bitcoin during this cycle is quite impressive.”

Leave a Reply

Your email address will not be published. Required fields are marked *