Bitcoin Below $5k Amid Coronavirus Outbreak; Is Bitcoin losing its ‘Safe-haven Asset’ title?
The Coronavirus has taken lives of 6,500 so far. The spreading COVID-19 has seized the financial markets as the world’s stock markets are suffering badly despite the governments’ measures to sustain the economy. Bitcoin is not exceptional as it witnesses a record low even below $5,000.
Fed’s Measures to Support Economy
The central bank of the United States Federal Reserve in its recent announcement states that the interest rates are cut down, from 0 to 1/4 percent. The initiative is taken to encourage investors’ confidence in the US markets.
The central bank also announces the package of $700 billion to counter the bearish markets. ‘’To support the smooth functioning of markets for Treasury securities and agency mortgage-backed securities that are central to the flow of credit to households and businesses, over coming months the Committee will increase its holdings of Treasury securities by at least $500 billion and its holdings of agency mortgage-backed securities by at least $200 billion,’’ Fed states.
Still, the US markets have not witnessed fruitful results of the injection of $700 billion as markets are going down steadily. It seems that the government’s action would not prevent the economy from COVID-19. This is not only for the US, but the whole world is witnessing negative effects of Coronavirus on the global financial.
Bitcoin is Also Suffering
Besides traditional markets, the digital assets market is also under the bombardment of the Wuhan-based virus. On Monday, Bitcoin crosses the significant level of $5000 in the downward direction. The move was unexpected, but it took the title of ‘safe-haven’ away from the Bitcoin.
On Monday, the leading assets first surged to $5,823, but then fluctuations in the price value started. After losing more than $1000, it plunged to its lowest lows. However, the leading asset recovered some loss in the price value. At the press time, Bitcoin is still low by nearly 7% in the past 24-hours.
Despite bitcoin price meltdown, some crypto maximalists are still favoring the coin move. The co-founder and CEO at Gemini, Tyler Winklevoss, Co-Founder, declares bitcoin as the ‘’world’s greatest hedge.’’ According to Winklevoss:
‘’Bitcoin is not a hedge to pandemics, it is a hedge to fiat regimes. A sudden, negative demand shock in the global economy’ will affect every asset, including gold, in the short term.’’
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