Bitcoin (BTC) fell significantly with the stock market in March 2020 due to Covid-19 epidemic concerns and prevention measures.
If stocks fall again, will it follow stocks in Bitcoin? According to Thomas Perfumo, head of intelligence at Kraken Cryptocurrency exchange, and Paul Eisma, Head of Trade for XBTO Group, the answer is rather mixed.
Perfumo stated that this year there is a high correlation between the S&P 500 and Bitcoin, but again, a crash in stocks will not affect Bitcoin. In the cryptocurrency industry, a comparison is often made with gold, as Bitcoin is often viewed as a store of assets.
In March, the USA took a series of measures to reduce and slow down the impact of the Covid-19 outbreak. By contrast, the US stock market fell 30% between March 4 and March 23, with its steepest decline in more than 20 years. Similarly, bitcoin dropped around 58% between March 7 and March 13.
However, Bitcoin has recovered pretty quickly. According to BTC, which rose by about 162% in the first 55 days following its collapse, the S&P 500 was only able to increase by 47% in 77 days.
Esma, who works at the crypto finance company XBTO, said that the stock prices are in line with Bitcoin and the latest correlation between the stocks Bitcoin is very worrying. “Correlations are stochastic, extremely difficult to model, but even more difficult to trade.”
Although Bitcoin and stocks have been in a correlation since March, it is a known fact that Bitcoin performs much better than all other assets. The leading crypto currency, which has begun to be seen as a store of value by institutional investors, can realize its potential rise in the current market. Due to Covid-19, which has become a global epidemic in the world, many investors direct themselves to more secure assets. Especially recently, Bitcoin is among these assets.
Opinions of investors started to change due to the changing conditions. Warren Buffett, a 90-year-old American investor and one of the first names on the world’s richest list, has announced in the past that he will never invest in gold and its derivatives. However, by investing in gold in Buffett after the global epidemic, it has shown how volatile the views in the market are.
Bitcoin (BTC) is trading at $ 11,723 as of writing.