Bitcoin’s price initially dumped alongside the mainstream markets, but now looks to be exploring its own route.
“When the stock markets crashed, Bitcoin crashed,” AAX crypto exchange CEO Thor Chan told Cointelegraph. “It appeared that they were correlated,” he posited, adding:
“However, the previous plunge of Bitcoin together with traditional financial markets is due to a liquidity problem. People dump whatever they can in any market. This is very extreme and rare because even the ‘safe haven’ assets dropped. Soon after, the liquidity became ‘normal’ again, we’ve seen Bitcoin’s price is discovering on its own, in an uncorrelated fashion.”
Bitcoin initially followed traditional markets
Mainstream markets suffered some of their worst negative price days in recent history after coronavirus fears and measures took flight in early March.
The Dow Jones Industrial Average, or Dow, dropped 9.99% on March 12, while Bitcoin plummeted more roughly 50% between March 12 and 13.
“Bitcoin traders watch the order book as much as they pay attention to the global economy,” Chan said, adding:
“Bitcoin’s current condition springs from the same uncertainty that everyone is facing. But crypto traders are definitely anticipating a rally. No one wants to miss out, and no one wants to lose while they’re waiting for it. Hence, the volatility.”
Money will flow back into markets
In the days ahead, Chan said he sees funds returning to crypto, causing gradual growth. He noted Bitcoin’s upcoming halving and the impact the event might have, although, such impact may be delayed, based on previous halvings. Chan also mentioned U.S. quantitative easing efforts weighing into the equation, as other nation’s central banks will follow.
Coronavirus dealings and market difficulties have led to a unique global situation, making the future more uncertain than normal. “Although the current crisis is not an ordinary recession, there will be consequences, both economically and politically,” Chan explained.
“I think the crypto community knows very well how Bitcoin might act under such circumstances – and while institutional investors are cautious at present, they know very well how the sentiment is in the crypto space,” the CEO added.
Chan also relayed several other thoughts on the current market state in a March 30 interview, in which he said he expects upward crypto prices in the coming weeks.