April 1 (UPI) — Bitcoin was hit hard by financial market turmoil in March, with the cryptocurrency plunging 25 percent in a single month, its biggest drop since November 2018, according tomedia reports. Investors are fleeing riskier assets as the new coronavirus outbreak casts a shadow over the outlook for global growth. Bitcoin fell about 25 percent in March to below $6,500, its biggest monthly drop since November 2018 and its seventh straight month of declines. Since Last June, the digital currency has only recorded growth in October last year and January this year.
Bitcoin’s plunge has undermined the perception that it could serve as a safe haven in turbulent times. As the stock and metals markets slumped in decades, digital currencies were also hit hard by the rapid sell-off of almost all assets eager to cash in.
“Bitcoin is a speculative tool, so it will naturally be one of the first to be sold in this risk-averse market. “It is conceivable that people who still have Bitcoin in their portfolio will certainly prioritize to sell their Bitcoin positions in order to meet margin demands or make up for losses,” said Craig Erlam, senior market analyst at Oanda. “
Bitcoin fell 25% in March, its biggest monthly drop since November 2018
Global markets have been plunged by the crisis, and cryptocurrencies have been hit hard. Some analysts believe the crisis could lead to one of the worst recessions in modern U.S. history. The spreading epidemic is also sure to plunge the global economy into a prolonged recession, and many increasingly worried economists are losing hope of a strong rebound.
In addition to Bitcoin, other cryptocurrencies also took a hit in March. Among them, Litecoin fell about 35% and XRP fell 25%. Ether was the hardest hit, falling more than 40 per cent. In such an environment, the argument that digital currencies can act as safe havens in turbulent times has waned significantly.
Bitcoin also recorded its biggest one-day swing in March: it fell more than 27 per cent on March 12, its biggest one-day drop in nearly seven years. Bitcoin’s intraday volatility averaged 5.8 percent in March, according to data compiled by Bloomberg. By contrast, gold prices, traditionally considered safe havens, have fluctuated by an average of 1.6 per cent over the same period.
“This volatility is mainly due to bitcoin being a new technology and its unstable usage, which in turn has led to a lot of speculation. “For me, one measure of success is whether Bitcoin can maintain a slow and steady upward trend in the future, rather than soaring in a straight way due to global uncertainty,” Matti Greenspan, founder of Quantum Economics, wrote in a report. “
Some cryptocurrency enthusiasts are expecting Bitcoin’s upcoming block reward to be halved (miners’ verification transactions receive fewer incentives). Bitcoin rose on the eve of the last halving (2016), so some are optimistic the same will happen this time. The Block Incentive Halving program will be implemented in May.
Matthew Dibb, co-founder and chief operating officer of Stack, an institutional digital asset platform in Asia, said: “The recent downturn has been triggered by the global Black Swan incident, but we believe these challenges to digital assets are short-term. On May 13th Bitcoin will see its block award halved, which will be another catalyst for bitcoin to reach $15,000 by 2021. “
In Oanda’s Erlam’s view, a volatile environment can provide opportunities, but Bitcoin must prove its value in the current environment. “This could be a turning point. But I’m not sure exactly what’s going to happen. (Le Bang)