Bitcoin Slips in Tandem with US Stocks a Safe-Haven?

Bitcoin fell by up to 5.54 percent on Wednesday after bond markets cautioned the potential for a recession is growing.

The BTC/USD tool today established a new local swing low of $9,470 on San Francisco-based Coinbase exchange. The downside price action brought the pair’s week-to-date losses to circa 18 percent. It nevertheless attempted a small recovery over the $10,000, a psychological resistance level during an uptrend, and succeeded. As of 11:25 UTC, the BTC/USD tool was trading at $10,075.

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Bitcoin Price Continues Its Downside Correction | Image Credits: TradingView.com

Bad Day for US Stocks

The bitcoin’s intraday activity followed a disappointing day on Wall Street. The S&P 500 index closed the session down 2.9 percent, with energy stocks leading to fall. At the same time, tech-heavy Nasdaq also ended after falling circa 3 percent on the day.

It was a day for treasuries also. Both the US and UK 10-Year Government Bond Yields plunged below the returns of shorter-maturity debt. It happened for the first time since the 2008-09 economic crisis — their connection becoming inversed rang the bells of a recession.

Meanwhile, Gold prices edged lower slightly on technical grounds. The yellow metal was on a steep increase this week, rising 1 percent in the previous session. The move visibly motivated traders to take near-term profits at new highs. Because of this, spot gold was down 0.08 percent at $1,515 per ounce as of 11:36 UTC today.

Doubts Cast Over Bitcoin Safe-Haven Status

The trend conflict between bitcoin and US stocks prompted analysts to question the former’s safe-haven status. Noted economist Alex Krüger pointed now that bitcoin was moving in tandem with Gold — a haven-asset with which it tries to compete — nor was providing any hedging solution to investors suffering in the US bond and stock markets.

“Confirmation Bias is the tendency to interpret new evidence as confirmation of one’s existing beliefs,” he added. “Stories that suit one’s prejudice and create a warm fuzzy feeling are generally welcome. Facts? Nobody cares about these.”

Peter Schiff, chief executive officer at Connecticut-based broker-dealer Euro Pacific Capital, criticized bitcoin for”collapsing” in precisely the same market environment that promised to catalyze its increase.

“If Bitcoin can’t make a new high with international equity and currency markets in turmoil, under what circumstance will it make a new high,” tweeted Schiff. “So many Bitcoin hodlers are convinced that Bitcoin is going to the moon they’re afraid to market any for fear of missing out on huge gains. Yet the purchase price of Bitcoin is plunging anyway. Imagine how much faster the price of Bitcoin will fall once that greed turns to fear!”

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