Bitcoin is Tanking Despite Coronavirus Fears, Showing Lack of Characteristics as Safe Haven

Bitcoin prices on Friday are plunging after marking their highest levels in over two months, hurt by an improving outlook of the eurozone economy, the stronger dollar, and – none the least – the Coronavirus outbreak in China.

The benchmark cryptocurrency’s spot rate fell by 1.66 percent to $8,246.14 as of 11:20 UTC today. At the same time, its futures listed on Chicago Mercantile Exchange (CME) slipped 1.49 percent to trade at $8,245. The moves downhill put bitcoin at the risk of closing this week in red, it’s first negative session since January 6.

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Bitcoin ends winning streak as demand fades at local top | Source: TradingView.com, Coinbase

Global Market Reassesses Coronavirus Risks

Bitcoin’s losses appeared as investors’ appetite in risk-on markets improved on Friday, for they brushed aside fears of the economic impact of the Coronavirus and embraced more-than-expected manufacturing data from Germany and France.

The European stocks rose higher, with the Stoxx Europe 600 surging 0.9 percent. Chinese markets were closed due to the Lunar year celebrations, but Hong Kong’s Hang Seng jumped 0.2 percent ahead of the afternoon trade.

Futures linked to the US’ three key markets also surged after the World Health Organization (WHO) refused to recognize Coronavirus as a global epidemic.

Concerns over a potential outbreak earlier this week had prompted Chinese equities to register their worst daily session in near-eight months. It had further sent the three leading risk-on markets in the US down.

Bitcoin and Coronavirus: A Strange Correlation

As global equities fell against the fears of a Coronavirus outbreak, investors didn’t look at so-called safe-havens as hedges.

Gold, for instance, remained marginally stronger this week after registering 0.12 percent gains. Nevertheless, the yellow metal’s spot rate was down 3.36 percent from its local top of $1,611.34 an ounce. Analysts at the Wall Street Journal said that Gold is due to end its winning streak owing to favorable economic data and strengthening the US dollar.

Bitcoin, whose correlation with Gold touched four-year high after an escalation in the US-Iran conflict, remained down for the very same reasons. The cryptocurrency failed to behave as a safe-haven asset against Coronavirus, partially because investors remained glued to risk-on markets.

The S&P Global Ratings, on the other hand, has warned a potential virus outbreak could erase 1.2 percent off from China’s GDP this year. The move could increase investors’ appetite for havens like Gold, which, more or less, could also prompt some to speculate on Bitcoin.

The cryptocurrency has started 2020 on a gaining note and is now looking to undergo a supply cut in May 2020. Analysts believe scarcity alone could send it up to as much as $100,000.

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Source: Newsbtc

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