Bitcoin Hammered, Loses 25% in 12 hours, Drops to 10-Month Lows
Bitcoin Hammered 25% in 12 hours, Drops to 10-Month Lows
Bitcoin plummeted a jaw-dropping 25% overnight, dropping from $7900 to about $6000 after 2 weeks of strongly-bearish movement, and the downward pressure doesn’t seem to be letting up.
For a few brief moments, Coinbase’s mega exchange GDAX managed to flash a $5500 buy price on its trading screen, which was a couple hundred dollars below the lows of other exchanges. During the midst of the panic, some exchanges were temporarily frozen (such as Deribit), and others displayed buy/sell spreads of hundreds of dollars, such as that shown below:
After the dust had settled, the price of BTC was desperately trying to cling to the $6000 level, while most hope for a continued bull market in 2020 was dashed by events that had occurred over the course of only the last 12 hours.
Following the activity of Wall Street and stock markets around the world, the crypto market has been continuing its 3 and a half week decline, with the total market cap of all coins the lowest it has been since May 2019. Although this year’s gains have already been wiped out in their entirety, there doesn’t seem to be much sign of the trend slowing down any time soon. Bitcoin fell below $6,000 and the U.S. stock market remained well in the red on early Thursday morning, on the verge of triggering a temporary halt in trading at the -7% mark, as is the custom protocol in such situations.
In the past 30 days, the total market cap of all coins has shed a whopping $140 billion, or roughly 45%, making it one of the worst months that crypto has seen since January 2018. BTC is responsible for about $78 billion of this, falling to lows not seen since May 2019. All told, the price of BTC was down about 23% in the last 24 hours as of the time of this article, with other major altcoins faring even worse with Ethereum (ETH) down 30%, Ripple (XRP) down 24%, and Bitcoin Cash (BCH) down 32%.
The stock market, on the other hand, has fared just as bad, if not worse when viewed over the context of the last 15 months, falling to levels not seen since January 2019. Ongoing fears over the coronavirus have paralyzed much of the globe with new countries announcing travel restrictions on a daily basis.
Entire industries and educations systems have been shutting down for fear of spreading the virus, which is deemed to be particularly contagious and possessing a lethality considerably greater than that of the flu. These shut downs will undoubtedly have an effect on quarterly earnings numbers by many companies, which is one of the reasons why the stock market has been negatively impacted over the last 3 weeks.
W.H.O declares Coronavirus as a pandemic. India braces for the Coronavirus outbreak & imposes visa and travel ban.
— TIMES NOW (@TimesNow) March 12, 2020
Whether or not the recent decline in crypto has much to with the stock market’s movements, the correlation between the two has definitely been on the rise in 2020, with the price of BTC being more strongly correlated to the S&P 500 stock market index now than at any time previously. With these recent events comes a lack of confidence in the idea that bitcoin is capable of acting as a safe haven asset in times of general market or economic turbulence.
One particular bitcoiner managed to capture the sentiment of despair held by many long-time traders quite accurately, posting on the Bitcoin Forum:
“All markets are dumping hard, but now I don’t hear that propaganda about digital gold or safe haven anymore. The question is, why? According to this BTC should be rising in price but it is dumping really hard. I won’t sell any single coin today, I am just shorting it and then I will go long.
As said before, there is no Satoshi Spirit about financial freedom or social inclusion anymore.. It is a shitty game played by whales and exchanges. Everyone can hold or sell, taking his own decisions and assuming the consequences.” – ChiNgadOr, Bitcointalk forum member
One well-known cryptocurrency trader, who goes by the handle masterluc on crypto-related forums, or PentarhUdi on Tradingview.com, painted a make-or-break scenario which showed the price of BTC smacking straight down on a very basic support line, suggesting that an imminent bounce would prove greatly positive for bitcoin’s future, and a further sink to be immensely bearish.
While bitcoin and other cryptocurrencies seem to be oversold at the moment, there is no necessary indication that they should come springing back up in the context of a continued, broader sell-off among stock markets around the globe. Perhaps after these much larger markets have reached some sort of stabilization will cryptocurrency resume its long-term upward trajectory, but it is unlikely that they will do so before then.
In a previous article we discussed how the crypto market is likely to be affected by the coronavirus, albeit in a roundabout way. You can read more about it here.