The cryptocurrency market has taken a tumble in recent weeks and days. Perhaps most notably, the price of Bitcoin recently fell to levels near $7,500 during yesterday’s stock market meltdown. Now, a Libra Association member is shedding some light on the crypto market downturn.

What’s behind the recent crypto market downturn?

Specifically, this crypto broker profile is Marc Bhargava, the co-founder of Tagomi. Tagomi is a “crypto prime broker” from New York, which recently become a member of the Libra Association. Moreover, Bhargava is now offering some “rooftop view” insight from Tagomi on the recent market fall.

According to Bhargava, the crypto market’s recent stumble is due to margin calls on non-crypto assets. This could be leading to liquidations in the cryptocurrency market. This is, in turn, similar to Toshi Times’ take that the stock market fall is spreading into the crypto market.

Bhargava also suggests that although Bitcoin may become a “counter-cyclical” asset, such as gold, it is not there yet. This reasoning could further explain why Bitcoin fell sharply yesterday, but gold saw gains during the stock market fall.

“That’s just not where it [Bitcoin] is yet in terms of its evolution, primarily because larger asset managers and macro traders don’t trade/own BTC yet, and so you don’t see it independent from equity market movements like you do for gold.”

Stock market panic could be gripping the crypto market

What’s more, Bhargava also indicates that the stock market panic is affecting the crypto market. In fact, he suggests that Bitcoin and crypto is more akin to technology stocks than it is to gold:

“BTC and crypto is currently a risk-on asset, more similar to tech and VC than gold, so with oil prices and the general stock market tanking, the latter more due to coronavirus and the global slowdown associated with it, it’s not surprising that there are multiple sellers of crypto right now.”

These comments tie into recent suggestions by Campbell Harvey, a professor of International Business at Duke University. According to Harvey, this recent stock and crypto market plunge show that cryptocurrencies are, in fact, not safe havens.

“People didn’t flee to cryptos”

“Now, if these cryptos were safe havens, then you would expect maybe no change in their value or maybe even an increase in value. But that’s definitely not what we’ve seen. The cryptos got battered and dropped by more than 10%.

Harvey starts by stating that safe havens would be largely immune to major market events. However, yesterday’s Bitcoin drop towards $7,500 indicate that this is, in fact, not the case.

“So that suggests to me, in a particular situation of great stress where people are realizing that there’s systemic risk unfolding, the stock market drops as expected, people flee to safe assets, but they didn’t flee to cryptos, they fled to the U.S. 10-year bond.”

One should note, however, that the cryptocurrency market is now on the rebound. Specifically, Bitcoin is trading at approximately $8,150 and the crypto market is in the green. Nevertheless, today’s trading will likely also be volatile.