What effects does the corona virus have on Bitcoin? In the last hours on March 19, 2020, the Bitcoin price rose by a staggering 20% in times of the Corona crisis and is at $ 6300 at the time of writing. But be careful, the increase of more than $ 1000 in such a short time could be a fake breakout. So let’s take a look at what is happening and why the Bitcoin price is currently (actually) strongly correlating with stocks.
Bitcoin is not ready yet
As much as we all love Bitcoin and know exactly why we are doing it, we also have to look at the development objectively and not let our emotions guide us. So let’s take a close look at what’s going on and why you should be careful now.
The Corona crisis is currently driving all markets against the wall. The stock markets, for example, have huge record losses in some cases. For example, the DAX has lost almost 40% of its value since the crash began (DAX is a stock index that represents 30 of the largest German companies). That means on average the largest German companies lost 40%. So there are some who have lost even more, such as Daimler with almost 60% loss. Investors flee the markets and prefer to trust cash and assets across the board. Risky assets such as Bitcoin are particularly affected. People’s panic leads them to irrational behavior, which is reflected in the steadily falling share prices.
The DAX has lost a few points again in recent days, despite the emergency package from the ECB. Amazingly, there has been a strong correlation between Bitcoin and the stock market over the past few days. It seemed like everything that was happening on the stock market was delayedly reflected in the Bitcoin price. So it seems that investors are taking the situation on the stock market as a starting point to buy or sell Bitcoin. But the Bitcoin outbreak today contradicts this thesis. Is Bitcoin detaching from the stock market or is it a fake breakout?
DAX vs. Bitcoin
To clarify the correlation, we have created a graphic for you that should illustrate the whole. As an example, we take the DAX index to compare it with the Bitcoin price history. We randomly chose the DAX as a representative for the stock market. We look at the last 5 days.
