Gold and Bitcoin react to global panic
Amid all of yesterday's chaos in bond, commodity, and stock markets, with the yield on the 10-year US Treasury note dropping below 0.5% for the first time in history - a strong indicator that investors are desperately looking for safe harbors - two supposed safe-havens in 'alternative currencies' behaved quite differently.
Gold prices remained flat over the day at $1.673 per ounce after reaching a historic high at $1,700 last night. The commodity is up 5.6% in March, displaying a healthy performance during the Coronavirus epidemic which has now spread to nearly every country on the planet.
On the other hand, Bitcoin (BTC) is down 13% in 48 hours, testing its lowest level since early January at $7,750.
Brian Armstrong, co-founder and CEO at Coinbase, was caught off guard by the recent price move as expressed by his shock by tweeting:
“Surprised we’re seeing the Bitcoin price fall in this environment, would have expected the opposite.”
BlockTower co-founder Ari David Paul, also tweeted that despite a recent 25% drop in less than 30 days, Bitcoin remains up 7.5% year to date.
Earlier in the day derivatives trader Tony Stewart tweeted that options skew indicator - an important he interprets as a good measure of fear - rose significantly over the past week. According to Stewart, “this skew measures a fear for further downside moves.”
Bitcoin 25d skew. Source: Skew.com
Analysts warn that the financial crisis could deepen
Dennis Dick, head of markets structure and proprietary trader at Bright Trading LLC, raised a red flag on the potential outcome of today’s market reaction. Dick said:
“There is potential that we could be at the start of a financial crisis part two… It’s a possibility right now that wasn’t on the table until we had this oil plunge over the weekend.”
Bitcoin daily price chart. Source: Coin360
The overall cryptocurrency market cap now stands at $222.2 billion and Bitcoin’s dominance rate is 64%.