As of the time of this writing, the price of Bitcoin stands at just under $5,000 USD after plummeting over the last couple weeks. There are several reasons for this, not the least of which is the global impact of the spread of coronavirus a.k.a. COVID-19. If the recent plummeting of Bitcoin proves anything, it’s that contrary to popular belief among enthusiasts, digital currency isn’t necessarily ready to be a safe haven for investors when all other investment instruments and commodities are taking a nosedive.
COVID-19 Ripples Through Investing World
There are many reasons the price of Bitcoin is down over the last week. The coronavirus epidemic is only one of them. The reality is, COVID-19 is hammering virtually every aspect of the investing market. The S&P 500 which lists an aggregate share price of the top 500 companies in the world slipped nearly 10% over the last 48 hours partially because of the virus but also because of dropping oil prices and stagnant negotiations between Russian oil companies and members of oil & gas related organizations around the world, including OPEC.
So far it seems as if the viruses infecting more and more people around the world, and not just in China or developing nations. The fact is that the United States, Canada and other Western countries are far behind in testing for the virus, so the world doesn’t necessarily know how many people are actually infected.
Whether we are talking about Bitcoin or any other form of investment, the reality is that investors pull back during times of uncertainty.
Cashing in on Scam-Related Proceeds
Early last week, the price of Bitcoin had dropped from $8,900 USD to $7,700 USD in mere days. Many experts suspect that the sudden drop in prices due to scammers linked to the PlusToken liquidating more than $100 million in assets at the time. In a market as small as the cryptocurrency market (small relative to the multitrillion dollar broader finance market), a $100 million selloff is enough to send prices spiraling.
Six of the people behind the PlusToken scam were arrested in June 2019 after they ducked investors out of nearly $2 billion, but that doesn’t mean all of the funds that were stolen were recovered. An estimated 180,000 Bitcoins, 6.4 million Ethereum tokens and $111,000 .U.S. Dollar Tether tokens were stolen from investors and never recovered.
Naturally the scammers going to jail were smart enough to leave those coins in the hands of other people who could liquidate the assets and ultimately cash in, to the detriment of the broader market.
The liquidation of these assets has been happening since August but obviously a big portion of that liquidation occurred last week. Little did everyone know that the worst was yet to come in terms of Bitcoin’s price.
The End of a Bull Run
Since the end of December 2019, the price of Bitcoin was on track to nearly triple. It surpassed $11,000 USD before its recent plunge down to a sub-$5,000 price point. Regardless of scammers and the COVID-19 outbreak, perhaps it was only a matter of time before the price cooled off. Although Bitcoin’s third halving event is approaching in May, the second halving event in 2016 didn’t produce immediate exponential price gains. A retracement that lasted a few months occurred first before Bitcoin eventually catapulted to its highest all-time value at the end of 2017.
Whether or not this current bull run is actually over remains to be seen. The upcoming halving event may not be enough to push the Bitcoin price to new heights like some experts are predicting. At least not yet given all that’s going on with the stock market and the public health concerns that have people all over the world on pins and needles right now.