According to global cryptocurrency exchange Luno, Bitcoin’s recent price drop has been significant but needs to be viewed alongside the changes in the other markets. In the same time period, the DAX has dropped to a seven-year low, the FTSE 100 to an eight-year low, and BTC is only at a 12-month low, still up 26% year to date.
Since the Covid-19 pandemic was declared last Wednesday, stocks have officially entered a bear market, falling more than 20 per cent from their peak in February, causing almost every single asset class to lose significant value.
Marcus Swanepoel, co-founder and CEO of Luno commented: “Bitcoin was formed in 2008, at the time of the last financial downturn and from then until now has always been seen as uncorrelated to the main markets. However, last week the unprecedented situation created by the coronavirus led to the highest ever level of correlation with the S&P500, as investors trading BTC alongside other assets looked for market value. This was not unexpected with Bitcoin behaving it the same way as Gold and other assets, but over the next weeks and months we expect cryptocurrencies to move back to their uncorrelated position which will offer a very bullish performance in the medium to long term.”