Bitcoin Falls Below US$8,000 Yet Accumulates 100 Percent Rise in Past 12 Months

RIO DE JANEIRO, BRAZIL – Regarded by many as the “digital gold” that would provide protection against traditional market turmoil, the Bitcoin was unable to save itself from the global stock market crash on Monday, March 9th. Nevertheless, the crypto-currency keeps outperforming other assets on a year-to-date basis.

By 6 PM (Brasília time) March 9th, the Bitcoin was recording gains of 5.67 percent, quoted at US$7,866, returning to levels recorded on January 7th. Earlier, the world’s major crypto-currency had accumulated losses of more than ten percent in the previous 24 hours. In Brazilian reais, the trend is milder, with losses of 3.28 percent, at R$37,232.

Despite such losses, the Bitcoin continues to show an increase of approximately nine percent in 2020, while the IBOVESPA has dropped 22 percent. In the past twelve months, the crypto-currency has recorded gains of almost 100 percent, while the Brazilian stock market declined by 8.6 percent.

Yesterday’s trend also affected other crypto assets. Of the 40 largest digital currencies in market value, only one recorded slight gains. In the top three, the Ethereum dropped 7.73 percent to US$197, while the Ripple (XRP) dropped 4.81 percent to US$0.204734.

Regarding this drop in recent days, influenced both by the outbreak of the new coronavirus and now by the oil panic, Safiri Felix, director of the Brazilian Crypto-economy Association (ABCripto), says that the lack of understanding and predictability has led to an impact on the crypto market.

“The coronavirus was the 2020 black swan, nobody could price the short-term impacts, which applies even to the Bitcoin,” he says. “Because it’s relatively liquid, at first we see strong selling pressure, with many operators leveraging this to pocket profits and cover losses in other asset classes”.

On the other hand, he recalls that the drop in the Brazilian market is relatively lower than the one seen in dollar quotations. This is because the strong rise of the American currency against the real ultimately mitigates the Bitcoin trend when compared to its value abroad.

Even with the recent panic of investors and the spotlight on the coronavirus crisis, Safiri points out that the main event for Bitcoin will still be the “halving”, an event in which the reward for “miners” will be reduced by half, reducing the crypto-currency supply and leading to an upward pressure on the price.

“Effectively the most important event for the Bitcoin remains the adjustment of the miners’ rewards in May. If the price can sustain itself above the production cost, very abrupt drops may create good opportunities for long-term allocations”, says the expert.