The economic impact of COVID-19 has sailed through the shores of almost every country in the world, wreaking unprecedented havoc on markets globally. Over 6 trillion has reportedly vanished from stocks around the world, creating an horror of uncertain future for the world economy. The World Health Organization (WHO), said the world should brace up for more cases as the disease keeps spreading to new countries in minutes.
There have been over 85,000 cases and counting, with the largest economies in the world (US and China), taking a big fall, and there is yet little hope for its containment. There have been over four new cases of the virus in the US in the last 24 hours, raising the alarm for a possible spread in the world leading economy which will do more harm to the already wrecked world economy.
California announced a second possible instance of community spread, Oregon and Washington States are on the radar also. As experts try to find a cure, the virus pushes through the walls of defense, crushing humans and businesses. Not even digital currency is spared. Bitcoin is down more than 10% since early this week, below $8,700 and far from its 2020 high of around $10,450 on Feb. 12. Now bitcoin is up only 22% for the year, after it had been up close to 50% just two weeks ago.
The other big wings in the cryptocurrency space are not spared either, among the three largest market-cap coins after bitcoin, either (ETH-USD) is down 15% in the past five days, ripple (XRP-USD) is down 14%, and bitcoin cash (BCH-USD) is down 17%. The turn of events in the digital currency market has prompted people to question if bitcoin is really a safe haven from economic crisis. The answer so far has been yes and no, especially when gold appears to be immune to the dwindling economic impacts stemming from coronavirus.
The fact that BTC could not rally in the face of the advance by Gold prices and drop in equities was a "tell" pic.twitter.com/GpCiXjB5cD
— Peter Brandt (@PeterLBrandt) February 26, 2020
Frank Chapparo of Bitcoin news site, The Block said it is nascent and volatile: “This is still a very nascent, volatile asset class. If I’m an investor and I want predictability in my portfolio, I’m not going to be outsized allocating to bitcoin and other digital assets. Now, that doesn’t mean that this narrative of bitcoin being a hedge against global economic insecurity or political insecurity [is wrong]. That’s still something that could play out over the next ten, fifteen, twenty years,”he said.
One conclusion that many have come to terms with is that COVID-19 is such a powerful force that Bitcoin would totally resist it. The digital currency economy could not be immune to a virus taking such a crushing ride on the global economy. However, it offers uncommon hope to investors against global insecurity in the long run, even though the accurate predictability of the future outcome is not guaranteed.
BitGo co-founder, Ben Davenport provided an answer to the question of “Bitcoin’s haven” status that is neither here nor there. When the question was put out by Bloomberg Crypto on Twitter. Davenport responded, saying it’s neither a risk-on nor a risk-off asset right now.
Bitcoin is neither a risk-on nor a risk-off asset at this point. It still marches to the best of its own drum. The actions of whales and leveraged traders are far more meaningful than any macro concerns. https://t.co/i91iLajV6w
— Ben Davenport (@bendavenport) February 26, 2020
As the COVID-19 onslaught continues, some of the biggest and most prominent bitcoin bulls are still bullish on the “safe haven” theory. Tyler Winklevoss on Wednesday night, as the price of bitcoin was sinking, tweeted: “At some point people will wake up and realize that bitcoin is the best safe haven asset the world has ever seen. Until then, opportunity abounds.”
Yes, “opportunity abounds” because compared with stock markets around the world, Bitcoin still offers security in times of economic crisis, though proving exactly not true to the “safe haven” narrative. It breeds concern to investors because, as a digital alternative to fiat, the coronavirus crisis is expected to be a boost to cryptocurrency.
The crunching crisis has however, failed to spur growth in the digital currency industry, putting the audacity of bitcoin and the others into serious questions. Bitcoin is often called “digital gold,” a phrase which is supposed to represent its resistance to conventional economic crisis, its failure to live up to that in the face of coronavirus scourge has cast doubts on the “safe haven” theory.