(Newswire.net — April 6, 2020) — The coronavirus has undoubtedly thrown the financial markets – and, indeed the whole world – into crisis mode. A sense of unpredictability abounds and that means even seasoned traders who know their John J Murphy from their Edwin Lefèvre will be struggling to know what happens next.
In amongst all of that sits bitcoin. This is an asset that has been characterised by volatility for its entire existence. From spectacular highs of about £15,000 at the end of 2017 to dramatic drops back to £2,500 at the end of 2018 and then back up to almost £10,000 per bitcoin in 2019 – it has been a rollercoaster ride that has raised eyebrows of even the most seasoned trader in the fast paced forex market.
But, what about now the rest of the market is in turmoil? What does that mean for bitcoin? Is it already ‘yesterday’s news’ and a story from a bygone era, or is this actually its opportunity to become established as an asset?
Safe haven or outlier?
It’s fair to say that, so far, opinion is mixed on how to categorise the behaviour of bitcoin. As Benjamin Pirus notes for Forbes: “As a borderless digital asset not controlled by governments or centralized companies, bitcoin’s price should, in theory, travel its own path, independent of other currencies and markets.”
However, Pirus demonstrates how some have argued that bitcoin is being seen as a ‘safe haven’ in the same vein as things such as gold that usually attract investment in a crisis – yet there are others arguing just as fervently that bitcoin doesn’t correlate with anything and continues to be an outlier with its own behaviour and price pressures.
Search interest
If it’s tricky to determine the popularity – and trajectory – of bitcoin by looking at other assets and making comparisons, then we’re forced to look elsewhere for signs of bitcoin’s enduring popularity or otherwise.
One crude but effective way is to look at search data. This shows an abundance of interest in terms such as ‘bitcoin’ and ‘buy bitcoin’ – and many more results for ‘buy’ terms than those centred on ‘selling’. Even during a time of apparent difficulty – with bitcoin prices dropping about 60% – sites such as Coinbase broke web traffic records and experienced significant surges in trade.
If you’re defining ‘popular’ as ‘interest from lots of people’ then it’s certainly the case that bitcoin has retained this.
Forged in one crisis, defined by another?
But what about its lasting appeal. Is it still a disruptive asset that can revolutionise payments across the world? That’s more difficult to answer, but it’s worth noting that there are those who think the current crisis presents an opportunity for bitcoin to secure its position.
Galaxy Digital founder Mike Novogratz summed this up by tweeting: “$BTC will continue to be volatile over the next few months but the macro backdrop is WHY it was created. This will be and needs to be BTC’s year.”
The macro backdrop referred to is the weakness of the world’s monetary system – with concerns over the security and control of the way each nation’s individuals transfer and spend money. The 2008 crisis made many people question the existing order – perhaps this crisis will throw up the conditions that finally make us overturn it? If that’s the case, bitcoin might be even more popular in the post-corona world.
It’s clear that bitcoin is still popular as a topic of discussion and, for many people, also still a popular investment. The coming weeks and months might help to determine whether it retains that popularity going forward.