Bitcoin on Comeback After Coronavirus Panic Sell

Posted | 07/04/2020 / Views | 6731
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The bitcoin price is up 6% over the last 24-hour trading period, rallying faster than even gold during these extraordinary times.

Over the past 2 or 3 weeks, the cryptocurrency has come back strong after a long period of decline. Compared, for example, to the stock market, bitcoin has more than held in there lately.

When explaining this price rally, analysts mostly pointed to investors’ desire for safe-haven assets.

“The newly updated jobless claims report in the U.S. helped fuel a sharp Bitcoin price increase,” said John Iadeluca, Founder & CEO of multi-strategy fund Banz Capital.

“However, additionally, yesterday marked the official start of the second quarter, a common tax incentive for new or added capital in the alternative investments market,” he stated.

“The release of the jobless claims report also came alongside the report of a near 50% increase in citizens receiving benefits, prompting a migration of investment to what could possibly be deemed ‘safe-haven assets’ due to the data suggesting increasing coronavirus economic fears. This can be further supported by the significant rise in gold & commodities.”

“I think that people are seeking cover from what they think is going to happen in the traditional markets,” he stated.

“The headlines are getting scarier by the day so people are trying to figure out where can they go for protection.”

Tim Enneking, managing director of Digital Capital Management, offered a different perspective on the situation.

“QE1, 2, 3 and infinity took place over years and coincided with the launch of Bitcoin,” he noted.

However, this latest round of QE “will be trillions of dollars over a period of months,” said Enneking.

“That has to devalue a currency – except currency value is relative (exchange rates) and if everyone is debasing, the devaluation will not be felt. Except versus something like BTC, which has a finite supply.”

“So, I would explain the current move up – and I predict it will continue – by attributing it to the realization that BTC will be a safe haven – not from temporary economic downturns, but from currency ‘printing presses.’”

“It may be the case that enough initial panic selling for Bitcoin has taken place, that folks are momentarily willing to be opportunistic about the asset,” he added.

“Bitcoin is less affected than equities by uncertainties surrounding what constitutes a reasonable valuation with respect to p/e ratios, GDP forecasts, employment, etc.,"

All of this supports the case for Bitcoin being an interesting asset to watch after the fear subsides, particularly if we’re faced with a slow macro-recovery.