When US-Sino trade wars begun gaining steam, bitcoin surged as equities like S&P, Nasdaq and Dow Jones plummeted. Unfortunately, as fears of an economic recession heighten, bitcoin and other cryptocurrencies have started feeling the heat. Wednesday, as the United States Treasury yield curve inverted for the first time since 2007, investors worldwide were fazed as this signals an impending recession.
For quite some time now, bitcoin maximalists have been banking on bitcoin being a hedge against these tumbling equities amidst the mounting US-China trade wars, uncertainties of a no-deal Brexit and now the skirmishes in Hong Kong.
However, bitcoin, alongside traditional equities, experienced a brutal sell-off yesterday as the price took a nosedive. The rest of the cryptocurrencies followed suit, some hemorrhaging more than bitcoin.
The coin is down by 4.5 percent within the last 24 hours and is exchanging hands at $10,369.21 at press time according to CoinGecko. Which begs the question: is the narrative of bitcoin as a safe haven still plausible?
Germany’s Q2 GDP Drops Indicating A Looming Recession
The growing US-China trade woes have largely impacted the economy of the European giant, Germany. Its gross domestic product (GDP) dipped 0.1% in the second quarter putting Germany in danger of a recession.
In the meantime, the economic sentiment in the country is very low as Europe braces for an inevitable economic slump after the no-deal Brexit. As the economy of the exports-reliant country plummets, regulators could loosen the noose on cryptocurrency operations in the country. The main question now seems to be when this will happen, not if.
Meanwhile, UK’s popular newspaper, Metro recently published a pro-bitcoin article on its online version. The article begins by explaining why Hong Kong residents have turned to bitcoin as protests mount. The article then continues to explain what bitcoin is and why it’s used, followed by a four-minute video. The presenter concludes saying:
“We are on the cusp of an era where people actually come around to the idea of using Bitcoins instead of the money we ordinarily use. If you think about it what’s the difference between the money you don’t see in your bank and the Bitcoins you don’t see in your Bitcoin wallet?”
Bitcoin’s Growing Dominance Makes It A Viable Safe Haven – Colas
Notably, despite the market-wide sell-off, bitcoin’s dominance has been on the rise. At present, bitcoin’s dominance stands at 67.9%. During an interview with CNBC, Nicholas Colas, co-founder of DataTrek Research, notes this rising bitcoin dominance alluding that it has made bitcoin “the standard of all crypto”.
He then goes on to say that the economic turbulence currently ongoing is similar to the 2008-2009 global financial crisis around which bitcoin was invented. Colas goes on to say that bitcoin has grown massively to become a global digital asset and its convenience makes it appealing to investors as a safe haven.
When asked whether he believes bitcoin is a good leader in indicating stress in the overall market, he responds stating:
“We are definitely seeing that and it really perked around the Hong Kong protests and some of the currency flights that happened out of Hong Kong and the Mainland(…)Nothing else was really moving but bitcoin was.”
Bitcoin Bulls Unfazed By Recent Dip
As ZyCrypto reported, perma-bull and co-founder of Morgan Creek, Anthony Pompiano remains unperturbed by this correction that has sent the markets south. He even predicted that if the worst comes to the worst, bitcoin would still outshine the S&P 500 in 2019.
Another bull that is nonplussed by the current bitcoin price plunge is Alex Kruger. The economist and trader said he is “not afraid”, referencing the fear and greed index which has now hit rock-bottom compared to during 2018’s crypto winter despite the fact that prices are higher now than they were then. This index collects sentiments from various cryptocurrency investors and then translates it into a figure. At present, this index points at 11 which indicates “Extreme Fear”.