The Bitcoin (CRYPTO: BTC) price edged lower over the past 24 hours, down 0.5% to US$49,253 (AU$70,741).
But the big moves came over the weekend. A crash that’s left the world’s number one crypto by market cap down 15% since this time last week.
So what happened?
Bitcoin fails to live up to haven status…again
As The Motley Fool reported on 29 November, when news of the new Omicron COVID variant broke, most major cryptocurrencies sold off heavily alongside other risk assets.
And Bitcoin was no exception. In the space of a single hour, the price tumbled 9%.
While crypto enthusiasts have long spruiked the token as ‘digital gold’, meaning it can act as a haven in times of market turmoil, recent events haven’t seen it live up to that billing.
On Saturday, global markets and particularly risk assets in the tech space, again came under pressure, this time due to US jobs data and interest rate concerns.
The Bitcoin price fell hard too, going from more than US$56,961 to trade below US$46,882, according to data from CoinMarketCap.
As for gold, the yellow metal hasn’t exactly shot the lights out. But bullion is trading almost exactly where it was on Saturday, at US$1,784 per ounce. Which is what investors are after when they’re seeking so-called haven assets to hedge their portfolios.
What the experts are saying
Bitcoin’s price moves are increasingly correlated to swings in global share markets.
Liz Young, head of investment strategy at SoFi, doesn’t buy into the token offering a low risk investment option.
According to Young (quoted by Bloomberg):
The crypto industry looks at Bitcoin as like this super-low-risk option. And it looks at some of the other coins as the higher risk option. But take a step back, and the rest of us look at Bitcoin as a high-risk option in the broader investment landscape. So it’s all about your perspective and your comfort level.
And Katie Stockton, founder of research firm Fairlead Strategies, said “The decline was likely in part technically-driven, exacerbated by the derivatives market, and not helped by the downside momentum behind high-growth stocks on Friday, to which Bitcoin has been positively correlated,”
So what’s next for Bitcoin?
Addressing this weekend’s price crash and his forecast moving forward, Antoni Trenchev, co-founder of crypto lender Nexo said:
As usual, since crypto traders deploy leverage it results in cascading sell orders and liquidations. We should find support around [US]$40,000 to $42,000 and then rebound in line for a end-year rally. If that does not hold, we might revisit the July lows of $30,000 to $35,000.
Invest with care.
The post Bitcoin (CRYPTO:BTC) price crash dashes crypto’s safe haven status appeared first on The Motley Fool Australia.
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More reading
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- Here’s how these 4 top traded cryptos performed in November
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- Why Bitcoin, Ethereum, and Dogecoin are slumping today
- Is Australia on the precipice of mass crypto adoption?
The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Bitcoin and Ethereum. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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