A day before the market went into a full-on panic mode because of Bitcoin price crashing nearly 45%, BitMEX CEO Arthur Hayes published a regular note on March 12th on his exchange where he talks about how despite trading below $8,000 Bitcoin outperformed most global equity indices in 2020.

But not anymore. The world’s leading cryptocurrency is down almost 30% on yearly basis trading around $5,230 after going to $3,850 on Bitstamp and further lower at $3,600 on BitMEX.

However, Hayes believes that we won’t be revisiting $3,000, which we didn’t do exactly, but “max pain probably resides somewhere between $6,000 to $7,000 Bitcoin.” Hays also noted that during these times any crypto hedge fund will be getting distress calls and dumping coins into a falling market which will only push the price lower.

Yesterday, the Seychelles-based exchange liquidated a billion-dollar worth of positions only to go down before it could push BTC even lower. The exchange went online only to be down again.

BitMEX suspended again

Liquidation engine going mayhem

Funding window ended & I think more liquidations popped up due to funding

— //Bitcoin 𝕵ack 🐐 (@BTC_JackSparrow) March 13, 2020

Trading volume and volatility is going off the charts and the market is in “extreme fear” and “the fear and uncertainty facing humanity is enough to inspire a global margin call,” said Hayes.

Investors selling assets to raise cash

These past few days the US stock markets experienced a rout of a level that was last seen in the 2008 financial crisis that has them tumbling into bear territory. The distress among investors because of the black swan event coronavirus (Covid-19) combing with oil price war not only affected bitcoin but also the traditional safe haven assets gold and Treasuries.

While the Treasury yield has fallen to their all-time lows as investors pile into them, even gold couldn’t escape the effects of the investors' need to jump into cash.

“As the stocks were sitting on their limit down, trading halted, and unable to fall further, investors wanted to free up capital before Lagarde's speech,” said analyst Mati Greenspan.

“The evidence of this is that many other commodities also sold off at the exact same time. Here we can see gold, platinum, palladium, gasoline, and sugar all plummeting around the same time, some of them even worse than BTC.”

After falling 4.5% on Thursday, gold rose 1% on Monday but is still on track to post its biggest weekly drop in about seven years.

“If gold’s being sold to raise cash in an emergency, which is what appears to be happening now, then it is doing its job as a safe haven,” said Brien Lundin, editor of Gold Newsletter.

But for bitcoin, correction means the digital asset losing all the traits of being a safe haven. Bitcoin might be trading like a risk-on asset but it still possesses the properties of being a store of value asset.

Bitcoin to run back to $20,000 by year-end

Bitcoin has been following the stock markets for the past month and on March 12, the sell-off worsened as we lost $8,000 level. In these past two days, Bitcoin has lost more than 50% of its value, which is much higher than the traditional markets but this kind of volatility or drops for the crypto market isn't unprecedented.

Meanwhile, the stock market jumped on the back of the Federal Reserve pumping $198 billion into short-term bank funding operations. Bitcoin jumped today as well, up 42% from the 2020 low we put in yesterday and is currently hovering around $5,250, however, this has been without the intervention of any central bank or government.

According to Hayes, as central banks press the print money switch into “beast mode,” by cutting rates to zero and announcing open-ended QE, bitcoin and gold will appreciate in value but it will take time.

“Bitcoin should enjoy a nice run back through $10,000 towards $20,000 by year end,” wrote Hayes.