Bitcoin disappoints as a hedge… for now

bitcoin trading

As with my previous post, (saying it’s still early days for Bitcoin to prove an effective hedge in times of crisis) we’ve now seen a dramatic panic sell-off, thanks to the economic threat posed by the Coronavirus, COVID-19.

Volatility continues, and we saw correlation with other markets, as investors have been switching into fiat value as the most popular hedge. Fair enough, but it’s a shame about all the other great projects in the space, that currently need support from strong-hand hodlers.

For seasoned crypto traders it’s easy (and attractive) to exit into stablecoin, and instead earn interest as the market reacts to such events. Getting the timing right can be down to sheer luck.

[On the subject of interest, Coinmarketcap now has a very useful section listing interest rates for many cryptos. I’ll add this to ever-popular Ade’s Press CryptoLinks.]

The case will be even more volatile for altcoin projects. However, the way some projects are currently rebounding, shows how far the space has come, and where excitement still rests. Notably, HBAR (Hedera Hashgraph) has been performing well, possibly still on the back of its positioning of Google on its Hedera Council, and being a large project with different tech and a lot development so far. [However, as ever, there are aspects to consider which make it a long way from being robust.]

A new breed of stakers and hodlers are emerging who stake and support web3 networks, whatever the price action.

A shake-out is always interesting, and some projects were over-valued at this time.

Keep Calm and Hodl on. Let your assets give your life value, don’t give it away to institutions, or day-traders who don’t recognise it.

Outlook

As the market corrects, and where Coronavirus headlines continue, the fact is we’re looking at least two or three months until things quieten down. No-one knows how long, but I’d suggest that bullish sentiment will return since big technical development and continued integrations continue this year for crypto.

Bitcoin is just not stable, large-cap or integrated enough to shrug off such events yet, plus there’s not enough understanding of just why it is such a safe hedge, where the traditional financial system gets tested. [For that, you must do more homework.]

It might be disappointing to see such a reaction, but it’s to be expected for now.

Will a recession dampen and slow down progress? Maybe… but this is also why more permanent technology exists. Useful or necessary things emerge here, or get integrated.

3/2020

 

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