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

Why requesting referrals for business growth is "a terrible idea"
Why requesting referrals for business growth is "a terrible idea"

Advisors argue that there are other means to drive growth than requesting referrals.

Flourish bolsters RIA support with Salesforce integration
Flourish bolsters RIA support with Salesforce integration

The partnership, which extends to CRM leaders Practifi, XLR8 and Salentica will give advisors a smoother path toward managing their clients' held-away cash assets.

Janney adds $1.1B with ex-Kestra, LPL and RayJay teams
Janney adds $1.1B with ex-Kestra, LPL and RayJay teams

The BD giant's latest eight-advisor recruitment burst gives it additional footholds in Ohio and Florida.

B. Riley keeps indy reps after selling employees to Stifel for far less than expected
B. Riley keeps indy reps after selling employees to Stifel for far less than expected

The price tag for the 40 to 50 financial advisors is up to $35 million.

BlackRock gets in line for the elusive ETF share class
BlackRock gets in line for the elusive ETF share class

The giant asset manager's "timing is interesting", says analyst as State Street goes the other way, seeking approval for mutual fund share classes of existing ETFs.

SPONSORED Out with the old and in with the new: a 50% private markets portfolio

A great man died recently, but this did not make headlines. In fact, it barely even made the news. Maybe it’s because many have already mourned the departure of his greatest legacy: the 60/40 portfolio.

SPONSORED Destiny Wealth Partners: RIA Team of the Year shares keys to success

Discover the award-winning strategies behind Destiny Wealth Partners' client-centric approach.