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Bitcoin Recovers as Coronavirus Pandemic Continues to Hurt Markets

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On March 3, Bitcoin (BTC) price gained the most on speculation that the US Federal Reserve, as well as other central banks, will be supporting markets even as concerns of the coronavirus outbreak continue to grow.

Bitcoin Jumps Over 4% After Last Week’s Plunge

Bitcoin gained 4% to take its price to $8,895, having suffered a double-price decline last week. This is welcome news for Bitcoin bulls, following last week’s 14% drop, which was BTC’s largest weekly loss since November.  In the third week of November, Bitcoin dropped around 19%. Similarly, last week’s equity markets also dropped last week as investors appeared to shun risk on concerns that the COVID-19 outbreak will result in a slowdown in the global economy.

For instance, the S&P 500 stock index dropped for the seventh consecutive day on Friday last week. This massive sell-off wiped out its rally of five months from 2,855 to 3,393. However, the index still managed to outperform BTC weekly with an 11% drop. Despite the decline, BTC is still outperforming the S&P 500 and gold by 20% on a year to date basis.

BTC Far from Being a Safe-Haven Asset

In the past, some investors have touted Bitcoin as a safe-haven asset similar to US Treasury bonds or gold. However, that safe-haven status was put into question when BTC tumbled in the same manner as many stocks on the market. The sell-off did halt somewhat after authorities across the globe, including the Fed, IMF, World Bank, and Bank of Japan, indicated that they could assist in offsetting any economic damage resulting from the coronavirus outbreak.

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Cryptocurrency Company TradeBlock’s director of currency research, John Todaro, indicated that investors are recovering after last week’s massive sell-off. He said that the easy monetary policy from central banks will support markets, especially riskier equity markets, and thus could extend to cryptocurrencies such as Bitcoin.

On Monday, the IMF and World Bank indicated that they would offer emergency funding, technical assistance, and policy advice to poor nations with weak health systems to tackle the virus.

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