COVID-19 has continued to wreak havoc in the world. Bitcoin touted as a non-correlated asset was put to test during the crisis as the movement of global financial markets plummeted.
Santiment, a crypto analytic platform, looked at mentions of Bitcoin in mid-March and coronavirus on social media platforms skyrocketed, to analyze any plausible correlations.
Inference can be drawn that a resounding fear continues to have a hold over traditional and crypto markets. Santiment stated,
“Is coronavirus fear still correlated heavily to the price of $BTC? According to what we see, the answer is still a very clear YES. Mentions have continued to decrease over time, indicating that the crowd has had the least amount of discourse revolving around the pandemic since March 7th”.
In the above chart, the green line represented BTC price, the total amount of mentions overtime on social platforms [social volume] was indicated by the blue bars while the brown line indicated the percentage of mentions of COVID-related mentions vs. all tracked keywords related to crypto.
In the initial part of March, Bitcoin fell massively as traditional market indices fell. Fear very much was present, and it is not surprising that the common assertion of Bitcoin being a safe-haven asset also remains disputed. So why didn’t it behave like one? The answer seems to be simple.
Low adoption rate is the biggest factor. Universally known safe-haven asset, Gold is owned by central banks, IMF, investment portfolios, industries and a lot of people. Bitcoin, on the other hand, is yet to see significant adoption. Besides, cash is still the undisputed leader. At a time of crisis such as this, individuals have opted either to cash out or exchange it for stablecoin for liquidity purposes.
Bitcoin bounced back as opposed to stocks, bonds, and commodities which went on a downward spiral as a result of panic-fuelled sell-off.
As the panic in the crypto market subsided, investors seemed to have been doubling down on Hodling before the upcoming halving. But does the trouble end here for Bitcoin? For the most part, Bitcoin did manage to detach itself from the traditional financial world. Having said that, it still has a long way to go in terms of being a safe-haven asset. Uncorrelated assets such as Bitcoin are often kept as an alternative asset. In times of turmoil, if it starts behaving similarly to the financial market, it could be deemed risky by portfolio managers.
Source From : Ambcrypto