The Bitcoin has dropped to a 12-month low, although it is still up 26% Year-to-date. According to global cryptocurrency exchange, Luno, the recent price drop in the BTC is quite significant, except when viewed alongside the changes in other markets.
Within the same decline period, the DAX has dropped to a seven-year low, the FTSE 100 to an eight-year low, while the BTC is only at a 12-month low,
Stocks officially entered a bear market since the outbreak of the Coronavirus disease was declared a global pandemic last Wednesday, falling more than 20% from the peak experienced in February. Subsequently, almost every single asset class has lost significant value.
Speaking on the price drop, Marcus Swanepoel, co-founder and CEO of Luno said, “Bitcoin was formed in 2008, at the time of the last financial downturn and from then until now has always been seen as uncorrelated to the main markets.
However, last week, the unprecedented situation created by the coronavirus led to the highest ever level of correlation with the S&P500, as investors trading BTC alongside other assets looked for market value.”
He noted that the changes were expected, especially with the Bitcoin behaving in the same way as Gold and other assets, but expressed optimism that the cryptocurrencies would move back to their uncorrelated position, over the next weeks and months.
This, he said, will offer “a very bullish performance in the medium to long term.”
What you should know: Bitcoin is a decentralized digital currency without a central bank or single administrator, and it can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries. It was officially released in January 2009.
As a medium of exchange, it uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets.