Crypto Markets Extend Brutal Selloff as Bitcoin Loses Safe-Haven Appeal
Crypto markets lost another $20 billion in combined value Wednesday, as bitcoin decoupled from gold in the mad rush out of risk assets.
Crypto Market Update
Bitcoin and the broader cryptocurrency market declined sharply midweek, surrendering all of the gains through early August. Since peaking near $320 billion on August 6, the cryptocurrency market has fallen by a staggering $53 billion, including a nearly $20 billion drop in the last day.
At the time of writing, the digital asset class was worth a combined $267.2 billion, according to CoinMarketCap.
Bitcoin, the largest cryptocurrency by market cap, fell more than 6% to a low of $10,026. Over the past seven days, bitcoin’s price has fallen 13%. Even with the decline, bitcoin’s dominance of the overall market held steady at 68.4%.
That’s because altcoins and tokens declined by bigger percentages on Wednesday. Ethereum plunged 8.6% to $189.49. XRP’s freefall intensified, as Hacked predicted, plunging 12% to $0.2593. XRP is now trading at its lowest level in a year.
Bitcoin cash was down 7.7% at $316.49. Binance coin shed 6.6% to trade at $27.42. EOS was last seen trading at $3.70, having lost 9.2%.
Bitcoin and Gold: Correlated or Not?
As bitcoin and the broader cryptocurrency market plunged, gold continued to surge on Wednesday, reaching its highest level in over six years. The yellow metal’s December futures contract peaked at $1,534.90 a troy ounce, gaining as much as 1.3%.
Bitcoin and gold have clearly deviated in recent days, a sign there newfound correlation may have been temporary. As Bloomberg reported last week, the two assets had been moving in lockstep with one another for the last three months, as more investors viewed bitcoin as a refuge from global economic turmoil.
Bitcoin’s status as “digital gold” may have lost some of its shine recently after the cryptocurrency failed to overcome $12,000 for the second time in a month. The resistance appears to be technical in nature, with bitcoin printing consecutive lower highs going all the way back to late June. In any type of market, lower highs indicate the emergence of a bearish trend.
Rather than being correlated with gold, bitcoin appears to be completely non-correlated with any traditional asset class – at least, when longer timeframes are factored. While bitcoin is clearly in a bearish short-term trend, the cryptocurrency rallied for five consecutive months through the end of June, a feat that was last accomplished more than two years earlier.
Even if we factor the latest reversal, bitcoin has more than tripled in value since December. In fact, it could lose another 50% and would still be outperforming the S&P 500 for 2019.
Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock. Charts via CoinMarketCap.