First global crisis for Bitcoin, but all is well: expert

Issa da Siiva

Pronounced dead by several sources after the outbreak of Coronavirus in the West, which saw cryptocurrencies plunging like traditional asset classes, Bitcoin appears to be experiencing its first global crisis, an expert said this week.

Dropped by more than the S&P 500 index, the famous digital currency saw its independence relative to other assets challenged, prompting many observers to conclude that the diversification argument does not hold anymore.

However, a SEBA Research’s historical analysis of several assets indicates that except for this event, crypto did not only correlate with stock markets, but was also able to perform like digital gold.

Based in Switzerland, SEBA Bank secures, trades and manages cryptocurrencies, digital assets and conventional securities. 

Besides historical analysis of financial markets, cryptocurrencies are resisting the crisis. In 2020, stablecoins saw a steady rise of 20%, and during the recent sell-off, the demand for stablecoins has increased, the SEBA Bank Research Department explained.

“Stablecoins are built on top of existing blockchains. The growing demand for stablecoins gives us confidence that the space is, in fact, thriving,” it added. 

“Does this mean that we know for certain that Bitcoin is going to bounce regardless of what happens to other asset classes? Absolutely not. Only it is premature to conclude that diversification does not work,” Yves Longchamp, Head of Research at SEBA Bank, said.

“Bitcoin had been pronounced dead 380 times before the recent crash by prominent personalities. This will be bitcoin’s 381st death, and it will be resurrected for the 381st time”, Longchamp pointed out. 

Nevertheless, he reiterated that in spite of the price drop, the underlying blockchain technology has operated well. 

“Crypto is supported by a robust technology and is here to stay,” he concluded.


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