The Independent value of Bitcoin fell by more than the S&P500 index, in a recent market crash. Tha fall has prompted people to question the efficiency of Bitcoins.
A study conducted by The Research Department of SEBA Bank has some contrasting conclusions about the situation. The conclusions were drawn after analyzing three different financial stress situations.
Striking Similarities between Bitcoin and Gold!
Gold is a precious asset, and so is Bitcoin now. The striking similarities between the two are driving people crazy. Below are two observed similarities between these two.
- Both of them are precious assets.
- Both of them are a storehouse of value.
- Both of them are considered classic diversifiers.
- Both of them do not belong to any existing Monetary system.
Financial Crisis for Gold
Financial Crisis of 2008
- During this Crisis, the market value of Gold fell by 30% in parallel with equities.
- The market revived after three months.
- Correlation fainted and Gold, again became a classic diversifier.
Black Monday Crisis in 1987
- There was a rapid rise in the prices, but they soon dipped at an insane rate.
- They continue to dwindle over the years in the primary market, but the scenario was opposite in the Stock market.
- Despite being a classic diversifier, it was reasonable for the gold prices to fall in the initial days of Crisis.
The First Global Crisis of Bitcoin
- In the last few days, the world is witnessing a casual run in almost all the sectors. As a result, the market value of Bitcoin has declined.
- No other industry has witnessed such a decline during recent times.
- The correlation has somehow reduced because of the sell-off.
- But this doesn’t ensure the revival of Bitcoin.
- It is too soon to conclude what will happen next as this is the 381st time, that Bitcoin has been declared dead.
- All the precious 380 times, Bitcoin has survived and bounced back with full force.
Massively Increasing Demand of Stablecoins!
In 2020 there is a significant rise of 20% in demand for stablecoins because of sell-offs. The fact that stablecoins are established over the existing blockchains gives people confidence in this thriving world.
With so many ups and downs, it becomes difficult to decide whether to invest in the stock market or not. Hence, the most important thing is to stay calm in a panic situation.
Dealing with the Stock Market Fluctuations
The COVID-19 outbreak has prompted a global concern. Markets are most likely to collapse, and economies will suffer a setback. But you need to stay calm in this tensed situation. You are not alone in this. We are in this together.