Bitcoin Price Has Changed, but Its Fundamentals Have Not Changed

The economic crisis is taking hold, but Bitcoin’s fundamentals remain unchanged.

The economic crisis that most economists have been expecting for months is finally starting. The coronavirus, and its rapid spread around the world, has simply acted as a catalyst for the sharp fall in financial markets that we have been witnessing since March 9, 2020.

Sooner or later, these financial markets artificially inflated by the policies of monetary creation and low interest rates of central banks were doomed to collapse.

This developing economic crisis is causing panic among a majority of people. In times of collective panic such as the one we are currently experiencing, the number one priority for 99% of people is to recover as much liquidity as possible.

Logically, we are therefore witnessing a liquidity crisis that is having a major impact on all the liquid markets on the planet. On Wall Street, the Dow Jones has lost 20% of its value over the last 5 days. Over the past month, the Dow Jones has fallen by around 30%. The S&P 500 is undergoing the same correction as well.

Elsewhere in the world, the situation is exactly the same. Gold, which has been the safe haven value in times of crisis for several centuries, has even lost more than 10% in recent days.

When everyone panics, there is no longer any safe haven.

Under these conditions, Bitcoin price falls as well. It could not be otherwise. Bitcoin is a liquid market. In fact, Bitcoin is the only truly free market in the world.

Even when it loses $60 billion in capitalization in a matter of hours, Bitcoin continues to operate so that its users can find the equilibrium price themselves.

Some opponents of Bitcoin are quick to draw two conclusions, which I believe are false, as a result of this fall in Bitcoin price:

Bitcoin is not a real safe haven in times of crisis.

Bitcoin is an asset that is correlated to gold, or to the financial markets.

I don’t think you can draw such conclusions over such a short period of time. The safe haven status of an asset can only be measured over the long term. Similarly, the possible correlation of Bitcoin with other assets can’t only be considered over a period of 5 days.

Bitcoin’s opponents therefore need to review their copy, and take a step back to see the bigger picture.

By taking a step back, they will be able to understand that while Bitcoin price has changed, its fundamentals have not. Bitcoin’s fundamentals as of March 17, 2020 are the same as those of Bitcoin as of March 1, 2020.

And Bitcoin’s fundamentals remain excellent which still gives me reason to be optimistic about the future of Bitcoin.