Bitcoin drops 50% in epic two-day tumble

Bitcoin drops 50% in epic two-day tumble
The price of the digital currency continued to swing wildly, undercutting claims that it can serve as a safe haven
MAR 13, 2020
By  Bloomberg

Bitcoin is proving its shortcomings as a safe haven amid the current global market meltdown.

The price of the largest digital currency continued to swing wildly in Asia Friday as a rout that began in earnest overnight in New York showed no signs of slowing down. Bitcoin dropped as much as 32% to $3,915, its weakest since March 2019, before clawing back most of that loss by midday in Hong Kong, according to consolidated pricing compiled by Bloomberg. Its drop of as much as 50% over the past two days is among the biggest ever.

Bitcoin was down 7.8% to $5,280 as of 12:25 p.m. in Hong Kong.

The wider Bloomberg Galaxy Crypto Index tracking a basket of digital assets hit a historic low in data going back to August 2017, sliding as much as 49% over the two sessions. Rival token Ether briefly flipped positive to reverse an earlier 30% loss, while XRP pared declines.

“This sell-off has caused cascading margin calls with the vast majority of investors shifting to exposure to cash,” said Wayne Trench, chief executive of digital asset brokerage and exchange operator OSL. “In this situation, correlation converges to 1 and even impacts potential ‘safe havens’ like gold and Bitcoin to varying extents.”

Global markets have been rocked in recent weeks by an escalating number of macro headwinds, from the intensifying coronavirus outbreak to a shock plunge in oil prices. President Donald Trump’s address to the nation Wednesday, which included curbs on most travel to Europe and unspecified relief spending, spurred further selling in equity markets around the world with the S&P 500 sinking the most since 1987 on Thursday.

“What do you want, cash or Bitcoin?” said Stephen Innes, chief Asia market strategist at Axicorp. “Obviously I want cash.”

Bitcoin is now down about 50% from its most recent February high. The crypto had been on the upswing this year to that point, as investors looked ahead to the so-called “halvening” -- a scheduled reduction in the Bitcoin mining rate designed to combat price inflation.

“Traders are pulling money out of Bitcoin to fund their margin calls on other asset classes,” said Ross Middleton, chief financial officer at crypto exchange DeversiFi. “Perhaps they think that there will be better short-term opportunities to go long other asset classes in the near future.”

Latest News

SEC bars ex-broker who sold clients phony private equity fund
SEC bars ex-broker who sold clients phony private equity fund

Rajesh Markan earlier this year pleaded guilty to one count of criminal fraud related to his sale of fake investments to 10 clients totaling $2.9 million.

The key to attracting and retaining the next generation of advisors? Client-focused training
The key to attracting and retaining the next generation of advisors? Client-focused training

From building trust to steering through emotions and responding to client challenges, new advisors need human skills to shape the future of the advice industry.

Chuck Roberts, ex-star at Stifel, barred from the securities industry
Chuck Roberts, ex-star at Stifel, barred from the securities industry

"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.

SEC to weigh ‘innovation exception’ tied to crypto, Atkins says
SEC to weigh ‘innovation exception’ tied to crypto, Atkins says

Chair also praised the passage of stablecoin legislation this week.

Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest
Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest

Maridea Wealth Management's deal in Chicago, Illinois is its first after securing a strategic investment in April.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.