It was meant to be bitcoin’s big moment.
At 5pm Eastern Time (9pm here in the UK) on Sunday, the Fed slashed interest rates to zero and announced it would be carrying out an additional $700bn-worth of asset purchases, along with deploying a whole host of other tools that it has not used since the global financial crisis.
The bastard child of post-financial crisis unconventional monetary policy, bitcoin, it seemed, was guaranteed to thrive. This, after all, was in fact the whole point of bitcoin! Those evil central bankers might be able to print money and bring about nasty old inflation in the land of fiat (or at least try to), but cryptoland couldn’t be manipulated. No, cryptoland lives by its own rules.
So for the citizens of that land, this felt a bit like the second coming. The
shills bros could be heard rejoicing far and wide.
Self-confessed “bitcoin and meat maximalist” Michael Goldstein was triumphant:
Non-self-confessed bitcoin bro Anthony “Pomp” Pompliano was almost smug:
Tyler Winklevoss, the more vocal half of the Winklevii twins and a long-term HODLer, was confident:
And Barry Shill-bert? Well he just retweeted himself:
For a brief moment there, it really did feel like the good old days. Bitcoin shot up from about $5,200 to about $5,900 just after the Fed’s announcement. This was the beginning of something special, wasn’t it?!
Alas, no. This bouncing cat, it turned out, was lifeless.
For those fleeting moments after the Fed announcement bitcoin could thrive; could be free; could resume on its slow but unstoppable trajectory toward the moon. But as soon as Asian markets opened, there was only one direction for bitcoin: groundwards.
Here’s a 24-hour price chart (in UK time), showing the spike, and then inevitable fall as it turned out, yet again, that bitcoin is in fact not an “uncorrelated safe haven” (screenshot from Coindesk):
Bitcoin has now crashed by more than 10 per cent in the last 24 hours, settling below $5,000 to trade at around $4,600 at pixel time while wider stock markets sell off. That takes its losses since mid-February to about 55 per cent. Ouch.
And as always, where bitcoin goes, other cryptos follow — often even more rapidly.
Here’s a snapshot of the crypto market right now (screenshot of the top-10 cryptocurrencies, from Coinmarketcap):
The one bit of green in that bloodbath is Tether, which, yet again, is proving to be a somewhat unstable “stablecoin”. A coin that is meant to be worth $1 is now changing hands at $1.02. Makes sense, though, in an environment where we’ve had a dollar shortage though, right? Yeah, some of its reserves might be in bitcoin, which is crashing spectacularly, but still it’s “fully backed” soooo… buy?
Sure. Everything’s fine. Keep calm and HODL on.
The crypto collapse gets cataclysmic – FT Alphaville
Isn’t bitcoin meant to be a safe haven? – FT Alphaville
Is bitcoin really an uncorrelated safe haven? – FT Alphaville
Bitcoin is the 10-year Treasury of our time – FT Alphaville
Coronavirus is “good for bitcoin” – FT Alphaville