Bitcoin Sell-off Just Leveraged Investors Trying to Get Hold of Cash Just Like Gold?

Must Read

Bitcoin “Next in Line” to be the King as HNWI and Hedge Fund Investors get into BTC for the First Time

“The economic shock wave that’s coming is going to be like nothing that any of us has...

Bitcoin isn’t Gold but Gold 2.0, a Hedge against US Dollar & Inflation

Bitcoin custodian BitGo CEO, Mike Belshe says bitcoin falling along with the stock market is good.

Bitcoin Price & Mining Profitability Jumps Back Up while HODLers Showing 2015-Level Conviction

So, today everything is surging. From the stock markets, silver, gold, oil, to digital...
- Advertisement Banner
Earn Free Bitcoin

Losing 8.5% of its value in February, Bitcoin price wiped out all the gains it made last month this week. We started the month at about $9,400 but ended it at just above $8,600.

Today, Bitcoin went down to $8,410. At the time of writing, BTC/USD has been trading at $8,500, down 2.11% in the past 24 hours while managing the daily trading volume of $633 million.

The ongoing sell-off has the Fear and Greed Index falling to 39, a level not seen in almost two months. The volume also took a hit, dropping down to a new 2020 low at regulated platform CME. On spot exchanges as well, yesterday we were as low as $275 million.

However, the low volume has a good thing to say about the current market condition as it “determines the strength of the signal.” On comparing the volume of February month to July 19, Trader Big Ched found that “this is a consolidation candle, not reversal candle.”

Currently, trader Crypto Michael is watching green zone around $8,300-8,400 for support and upper resistances at $8,950 and $9,150.

Gold Sell-off along with the Stock Market, a Poor Haven?

Bitcoin’s negative performance came during the time when the market is conerned about the impact of coronavirus (Covid-19) that has the investors running out of the stock market that saw its biggest weekly drop since 2008 and pile into traditional safe haven gold which climbed to new 7-year highs.

However, one thing worth noticing is gold also plunged on Friday. Gold’s sell-off as risk assets came under pressure was by leveraged money managers because of margin calls.

“Basically, the idea is that they need to get their hands on cash to prevent their leveraged positions being stopped out, and sell anything to get hold of cash,” said Bloomberg writer Ed van der Walt.

Back in 2008 gold got sold off along with most other asset. So, does this mean, gold is a poor haven?

“No. During the later phases of a sell-off, when central banks start easing, the metal really comes into its own. That’s what drove it to >$1,900 post-2008. And that makes me think my end of year target may be low,” said Ed van der Walt.

What about Bitcoin then?

This week Bitcoin fell along with stocks. According to Galaxy’s Mike Novogratz when things get very bad, investors take leverage down and take their profits as well.

Bitcoin “is not a safe haven because it goes up when there is global instability,” notes Arcane Research. According to them, bitcoin’s two unique properties; being uncorrelated and censorship-resistant are what make it a safe haven.

Negative correlation in itself is of no value because it can be easily created by short-selling assets. But an uncorrelated asset is also unique, which makes bitcoin as an asset class suitable as a safe haven.

“A safe haven that is neutral to every asset class, that has its own distinct value drivers and reacts to news and changes around the world differently than other assets. Bitcoin doesn’t follow gold, stocks, bonds or any other asset. This leads to an asset that is great as a tool for diversification of an investment portfolio,” said the authors Torbjørn Bull Jenssen & Bendik Norheim Schei.

In today’s envrionment, most assets are correlated which “might drive demand for uncorrelated assets in turbulent times.”

However, for an asset to be really a global safe haven asset, it needs liquidity, censorship resistance, and low credit risk. The main issue with the world’s leading digital asset is limited liquidity which has been rapidly becoming a non-issue as bitcoin trades all over the world without stopping, 24x7x365.

Bitcoin allows one to buy an asset that always represents the same value as the market price, with no uncertainty on what the asset’s underlying is.”

- Advertisement -
- Advertisement -

Latest News

Stock Market is Trading Like “Sh*tcoin” as the World goes Full Crypto

The main indexes of Wall Street were down more than 3% today as the number of coronavirus...
- Advertisement -Earn Free Bitcoin Records Growth for The First Blockchain ​​Web Tv Platform Dedicated to Sport Clubs And Athletes

Sophia Antipolis (France) and Singapore: The first web TV platform dedicated to sports clubs and athletes opened in...

Crypto-Broker Instacoins Receives Operating License in Estonia

Instacoins Estonia OÜ, a cryptocurrency brokerage, is pleased to announce it has received an operating license from the Estonian Financial Intelligence Unit (FIU). The...

iOWN Token is now listed on LATOKEN and P2PB2B exchange platforms.

iOWN Token is now listed on LATOKEN and P2PB2B exchange platforms. Both platforms are the first of many high-volume exchanges to list...

Momentum Protocol announces Solution Provider Program

Momentum Protocol announced today that it is starting to roll out its Solution Provider Program. An initial set of partners have already...