We already reported today how rapidly the Bitcoin price has dropped to $ 5900 today. But it gets even harder in the evening, the price dropped to up to $ 4860 (13.03.2020 at 01:00). The biggest bitcoin crash in a long time. These are the reasons!
Deepest crash in a long time
In just one day, Bitcoin has dropped almost 40%. Over the past seven days, the Bitcoin price has fallen by more than 45%. Other cryptocurrencies are hit even harder. For example, Ethereum has plunged nearly 45% in the past 24 hours and more than 55% in the past seven days. Other altcoins are similar to Ethereum.
How far does the descent go?
As we reported earlier, some were already expecting Bitcoin to sell similarly to what is happening on the stock market. But no one knew that the sale would take on such proportions. The DAX e.g. lost more than 12% and thus experienced the second largest loss day in its history. But the global equity markets are also panicking. Only gold is a little more stable. Gold temporarily lost over 2.5%, but stabilized over the course of the day. All because of fear, not because of the Corona Virus itself. There is pure panic and fear in the markets. So far, at least in Germany, the virus appears to be as dangerous as normal flu. Nevertheless, many people hamster goods and the shops are swept empty.
As it became known on CNBC, one of the largest stock exchanges in the United States will be closed for precautionary measures on Friday March 13th, 2020 (How ironic Friday the 13th …). It is none other than the Chicago Mercantile Exchange (CME), which remains closed due to the Corona Virus. It is particularly interesting that this exchange has been offering Bitcoin futures since 2017. This means that there is initially no trading.
Investors flee high-risk investments
The main reason for the crash is probably the risk of bitcoin. The panic, whether justified or not, leads to irrational action. Investors are pulling money out of the market, especially from risky investments to expand cash. It becomes particularly clear when you look at gold. Although gold has seen a sharp rise in recent months, the price has remained the same except for a brief 2.5% drop. Investors are looking for a safe investment. At the moment, investors believe that Bitcoin is not a safe haven, as the market shows. But that is exactly what it can still be, because it can also offer arguments for it. Bitcoin is deflationary and is becoming even rarer than gold, at least according to the stock-to-flow model. In addition, Bitcoin is not only steadily establishing itself as digital gold, but is also available as a means of payment. For this reason, France also classified Bitcoin as a means of payment.
If you believe in Bitcoin and know why you bought or want to buy Bitcoin, this crash could be a good opportunity. Especially with regard to the upcoming halving and the development of the legal situation.
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