Quantitative cryptocurrency fund company Strix Leviathan believes that Bitcoin cannot be used as a tool to hedge against economic instability, and that Bitcoin is as vulnerable to "market panic" as other assets. In light of an unprecedented stock market sell-off last week, the Standard & Poor's 500 stock price index has suffered the biggest change since the 2008 financial crisis. Bitcoin has fallen by nearly 15 percentage points in terms of US dollars. Is generally questioned.
As the new coronavirus caused panic in the market, the number one cryptocurrency by market capitalization began to fall with S & P on February 19. According to reports from 85 countries and regions around the world, there have been 91,000 new cases of the new coronavirus and nearly 3,200 people have died. The large-scale spread of the pandemic virus has also begun to make more and more investors turn to safe assets to avoid risks.
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Can Bitcoin continue to maintain value like "digital gold"?
In recent months, Bitcoin has been regarded as a "digital gold" by more and more people as an asset that can avoid risks. In addition to Bitcoin's ability to serve as a store of value, more and more people believe that this store of value can inhibit macroeconomic uncertainty.
In January this year, the United States launched a deadly drone attack on the Iranian military commander. Some analysts like Andrew Kang believe that during the conflict between the United States and Iran, the market has strengthened its belief in the above functions of Bitcoin, and the price movement of Bitcoin during this period is the best proof.
Is there any risk in Bitcoin?
According to Strix Leviathan, Bitcoin's latest downtrend suggests that in risky market cycles, the so-called "digital gold" may not be more vulnerable to "market panic" than other assets.
As a typical safe-haven asset, gold is expected to be more sought after during the outbreak of the new coronavirus, because more and more investors will choose to sell stocks in search of safer investment targets. On February 24, the fourth day after the S & P crash, the price of gold hit a seven-year high. The Seattle-based quantitative fund company said that more and more investors are turning to safe assets to avoid risks, and Bitcoin and Ethereum have been hit as a result. Due to the volatility of Bitcoin and Ethereum, Bitcoin and Ethereum have become "inferior currencies". Affected by the global sell-off, Ethereum plunged 25% in the process.
Some experts in January pointed out that Bitcoin is like a safe-haven asset, proving its status as a safe-haven asset reserve. Others point out that the adventurous behavior of cryptocurrency tracking stocks throughout February proved its status as a speculative asset. The competitive behavior indicates that the market has no idea what purpose Bitcoin will be used for, let alone what the final state of thousands of other crypto assets will be. In the final analysis, however, hedge funds have acknowledged that it is too early to judge whether these cryptocurrencies are risk-taking assets.
Compilation: Lin Shihao
Image source: Cryptoslate
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