Bitcoin and other crypto-assets have taken a huge tumble this week, March 2020.
For the first time, we saw a correlation between the stock market and crypto assets, dealing a blow to the narrative of crypto being an uncorrelated asset and its usefulness as a hedge against the stock market.
Oil prices are tanking too and coronavirus is spreading like wildfire throughout the world.
However, we need to keep in mind that the big issue here is the global Coronavirus pandemic, and thus we are living in very exceptional circumstances. Investors are not, in my opinion, behaving in a rational manner.
There is panic in the market, and hence it’s an exciting time for the shrewd investor who is able to think with his head rather than his emotions.
In my opinion, Bitcoin at around 5,000 Euro, down from 10,000 Euro just a few weeks ago, is an awesome opportunity to stock up on this asset.
As the world recovers from the Coronavirus scare in the following weeks and months, I expect to see Bitcoin rising up again to at least 10,000 Euro and possibly beyond, giving investors who invest now incredible returns that are probably not possible to achieve anywhere else.
Apart from this general thinking that I have, here are a few more pieces of information that help reinforce my opinion.
Data Shows Cryptoasset Sell-off Was Driven by Short-term Holders
On-chain data provided by Coin Metrics shows that recent price movements were likely mostly driven by shorter-term and relatively new holders. Long term holders appear unfazed in spite of the severe market downturn.
While market cap for most cryptoassets fell, the market cap for most stablecoins increased. This potentially signals that investors are piling into “cash,” or at least crypto cash equivalents.
BTC has also entered a historically attractive price zone, with a market value to realized value (MVRV) below one. MVRV compares a cryptoasset’s market cap to its realized cap. Realized cap can be thought of as an estimation of the asset’s aggregate cost basis.
Read the full report on the Coin Metrics’ State of the Network report substack.
Google Trends
It looks like people are suddenly more interested in buying Bitcoin after the crash. That’s good news, as more people buy then the price is bound to rise.
European countries legalizing Bitcoin
As reported by Les Echos, Bitcoin now has the official status of money in France.
Meanwhile, Bitcoin has been qualified as a financial instrument in Germany.
Bitcoin is getting stronger and stronger
The cryptocurrency market in 2020 is actually very promising. Compared to just two years ago, the technology is incredibly well-developed and attracting many institutional investors. Whether it’s Visa partnering with Coinbase, Fidelity offering a crypto mutual fund or Facebook trying their hand at a digital currency, the signs are clear that crypto is here to stay.
The future of crypto represents not a replacement to fiat currency but an alternative to those who wish to participate in a more liberating monetary system. As governments continue to lay down the regulatory foundation for this new technology, risks and volatility will eventually dissolve into a stabilized product that will bring unique innovation to the world of finance. So if you’re thinking about exiting the market for good because of market conditions, perhaps you should give that another thought. Not only is it time to HODL even more aggressively than before but it’s one of the best times in recent years to enter the market.
