The markets have been able to snap this intense losing streak today, however, with the Dow Jones rallying over 5% today while Bitcoin and most other major cryptocurrencies have similarly been able to climb roughly 4%.
The fact that Bitcoin and the aggregated crypto market has rallied today alongside the Dow Jones and other benchmark stock indices seems to further confirm the notion that BTC is in fact correlated with the global markets.
Although this correlation could simply be a coincidence, it has certainly done damage to the “safe haven asset” narrative that many Bitcoin investors have subscribed to.
Dow Jones Rallies as Stock Market Snaps Weeklong Losing Streak
Traditional investors were rattled by news regarding the rapid spread of the deadly COVID-19 virus, which was reflected in the equities market’s price action seen over the past week.
Throughout the latter part of February, the Dow Jones retreated from highs of just under 30,000 to its Friday lows of 25,400, with this massive decline marking the worst seen since the 2008 financial crisis.
Naturally, this led to panic amongst traditional investors, with fears of an imminent recession blossoming as speculation regarding the Coronavirus’s economic impacts abounded.
Today, however, the market was met with a ferocious response from buyers, who propelled the Dow Jones up by over 5% to 26,703, with most other major indices also climbing 4% or more.
It remains unclear at this time whether or not this marks a fundamental shift in market structure or if it is a so-called “dead cat bounce,” but the price action in the days and weeks ahead should provide clarity into this.
Bitcoin Moves Alongside Global Equities Market, Damaging Safe-Haven Narrative
Bitcoin’s price action throughout last week was strikingly similar to that seen by the global equities market, with the benchmark cryptocurrency declining from highs of $10,000 last Sunday to lows of $8,400, before climbing to $8,900 today.
Crypto Michaël, a prominent cryptocurrency analyst on Twitter, spoke about Bitcoin’s correlation to the global markets in a recent tweet, noting:
“Meanwhile; equity markets bouncing quite strong today. Not only equity markets bouncing, commodities are also stabilizing, and oil is bouncing up. Interesting to see how BTC and crypto is reacting further, as we’ve seen a good bounce today on BTC too.”
Meanwhile; equity markets bouncing quite strong today.
Not only equity markets bouncing, commodities are also stabilizing and oil is bouncing up.
Interesting to see how $BTC and crypto is reacting further, as we’ve seen a good bounce today on $BTC too. pic.twitter.com/gRGBHUrzSQ
— Crypto Michaël (@CryptoMichNL) March 2, 2020
If this correlation remains strong in the days and weeks ahead, it could spell trouble for Bitcoin’s “digital safe haven” narrative that many investors have claimed is the source of its financial value.
Featured image from Shutterstock.