Bitcoin was trading around $6,200 on April Fool’s Day, then the digital asset took a hike of over $500. Currently, we are trading over $6,750, up about 8.23% in the past 24 hours.
While the price of bitcoin jumped yesterday, US stocks closed in the red on Wednesday. The second quarter is not looking off to a great start, with the Dow, S&P 500, and Nasdaq Composite all finishing 4.4% lower.
Could this be the start of the decoupling? It’s to be seen as experts are still calling out the equities to find its bottom and if bitcoin manages to hold the fort then, it would be a good sign for the digital asset.
For now, major global markets are mixed on Thursday, with Futures markets pointing to a positive opening for Wall Street ahead of weekly jobless claims data expected later today in the United States.
Meanwhile, the longer-term Treasury bonds rose suggesting investors continue to see them as a safe haven asset. Gold prices also rose along with oil.
A Quarterly Win
Not just yesterday, Bitcoin has also decreased to less than the leading US equity indices in the 1st quarter.
In the 1st quarter of this year, the world’s leading cryptocurrency fell over 10% and in comparison, in the same quarter the Dow performance was it's worst ever, with a loss of 23% of its value. S&P 500 also had its worst first quarter ever by recording 20% losses, the biggest quarterly loss since 2008.
Meanwhile, gold prices rose by 4% in the first quarter.
This volatility in three months had been the result of the coronavirus outbreak that turned into a pandemic, with an unimaginable amount of people infected around the globe leading to the shut of business and lockdowns.
The economic impact from the novel coronavirus is predicted to be drastic which contributed to an enormous sell-off in the markets even with central banks putting forth stimulus policies.
A big test for Bitcoin
Despite Bitcoin crashing 48% and still being under pressure, a shift might be taking place. Vijay Ayyar, from crypto exchange Luno said,
“Bitcoin is still a relatively smaller asset class that is increasingly uncorrelated to traditional asset classes and this is in the process of being established as we speak.”
“This is why I believe the current market environment is a big test for Bitcoin and given how young the asset class is, it has actually held up quite well.”
He pointed out how gold is an already established safe haven asset and bitcoin is “arguably a second choice at this point” given its small but growing user base. Ayyar said,
“Hence, we’re seeing bitcoin lag gold a bit in terms of performance, but one can argue that as we move along in the next few months and years, bitcoin starts to take larger share away from gold and we will see an eventual ‘flippening’ happen, where bitcoin is at, or larger than, the market cap of gold and market movements in bitcoin start to reflect the overall market more accurately”
Interestingly, the market has already started to see action as Coinbase reported a 5x increase in deposits, twice the new user signups, and three times more trading users in the 48 hours of the crash.
Another US-based crypto exchange recorded an 83% rise in its signups and a 300% increase in verification, that is the KYC process to deposit fiat money instantly. Kraken is also on a hiring spree.