When the real crisis comes, the safe haven Bitcoin is forgotten

At the beginning of the year, the outbreak of the new crown virus has been effectively controlled under the compulsory quarantine of China. The rate of new cases in non-Hubei regions has been effectively controlled. The number of cases nationwide has also continued to decline for nearly a week. However, since last Friday, there have been signs of a major outbreak worldwide. In addition to Japan and South Korea, a large number of more than 700 cases have been diagnosed. Iran, Italy, and the United States, including the Middle East, Europe, and North America There have been more than double-digit confirmed diagnoses, and public health security issues around the world have triggered panic in the market.

After the global financial market resumed trading in early trading on Monday, gold jumped rapidly, and the spot gold price in early trading approached the $ 1,680 mark at the highest level, setting a new high of nearly seven years.

Affected by the epidemic, the three major stock indexes of the US stock market fell rapidly in the short-term. The Nasdaq index closed its biggest one-day drop in nearly three weeks on Friday. The performance of European stock markets is equally difficult to be optimistic. Last Friday, the pan-European STOXX 600 index ended the previous two weeks of continuous gains. German DAX, British FTSE and French CAC indexes fell across the board.

In terms of the bond market, 10-year US Treasury bonds hit a new low since September last year, and 30-year U.S. Treasury bonds hit a record low. Larry Kudlow, the chief economic adviser to US President Trump, said in an interview with CNBC that the sharp decline in US Treasury yields was due to market risk aversion and was caused by market fluctuations caused by liquidity flowing to safer assets after the outbreak.

Although the performance of the economic indicators released recently in the United States is not very satisfactory, and the poor performance of the US economic data has made the market's expectations that the Fed will continue to cut interest rates sharply during the year, the US dollar index has dropped significantly in the short term. However, because Japan happens to be one of the two major epidemic outbreaks outside of China, the yen did not show any risk aversion during this wave of sentiment-driven outbreaks, and the US dollar has well accepted this market demand. Therefore, the dollar rebounded immediately after a brief correction and quickly returned to an upward trend.

Under the circumstance that this risk aversion is flooding the entire financial market and has become the main driving factor for almost all mainstream assets, the emerging safe-haven asset Bitcoin, which was hyped by the market last year, did not show a strong enough follow-up performance. While gold has hit a new high for nearly seven years, bitcoin is still entangled in the narrow area where the sideways market has been in recent time. Although bitcoin did briefly reach the $ 10,000 integer mark in the early trading session today, it did not. Being able to complete the effective recovery of this position, compared with other effective safe-haven assets, in terms of the price of Bitcoin, this emerging asset does not seem to have gained the favor of liquid funds in the market in the recent period.

The latest weekly COT positions report released on Saturday showed that although open positions on the CME exchange's bitcoin contracts remained at historical highs without noticeable declines, compared to the Middle East geopolitical issues that bitcoin actually reported earlier this year Compared to the detonating risk aversion, in the short term, there is no sign of concentrated funds flowing into the bitcoin market.

The trading data of LocalBitcoins, an over-the-counter trading platform announced by Coindance, shows that the total amount of over-the-counter bitcoin transactions worldwide has not risen but declined in the past week, and the actual demand for bitcoin purchases worldwide has not increased significantly. In the recent week when the epidemic broke out, demand for bitcoin buying has actually declined.

According to the data released by AICoin, the bitcoin market has seen a relatively obvious outflow of funds. The net outflow of funds before midday today reached a peak level in nearly 24 hours, and the net outflow level of the bitcoin market around 11:00 exceeded 1 billion yuan. RMB.

For a geopolitical crisis in the Middle East, this market can more effectively foresee the next development of the event, and for events with a relatively limited scope, Bitcoin has gained some high-risk appetite funds with some inherent advantages in design. After such incidents, the market also chose to buy bitcoin under the banner of risk aversion, but this buying order was still heavily mixed with speculative factors. At the beginning of the year, a wave of external funds poured into the bitcoin market but in the short term After two short weeks, the market performance concentrated on "running" has proved this judgment.

What we are facing now is the global outbreak of the epidemic, which may cause "indiscriminate blow" to almost all major economies. The impact on the global economy is obviously much greater than the risk events such as the geopolitical crisis that occurred earlier. In this case, the market's speculative sentiment and risk appetite have been curbed to the greatest extent, and the result we have seen is that liquid funds choose to unconditionally believe in gold and U.S. Treasuries, which have been the most reliable for hundreds of years. The so-called "hedging function" was almost completely forgotten by the market.

It is true that the characteristics of Bitcoin's total amount and "borderless" are very similar to the advantages of gold, and Bitcoin is even far stronger than gold in terms of portability. But it turns out that this sort of pros and cons on paper attributes is actually reflected in a stable social background. At least at this moment of time, when the real crisis comes, Bitcoin, an "emerging asset" that can't really be held in its hands, is still difficult to provide enough persuasive power. After all, once the network is down, where is your bitcoin?