Bitcoin Is Not A Hedge Against Global Calamity, Says Mike Novogratz
The crypto market seems to be looking good today with the most important coins trading in the green.
Crypto traders have been really worried lately to see Bitcoin’s price falling for a few days now. Analysts said that is a normal price move ahead of the halving, which is scheduled for this May, but some are blaming the global fear of coronavirus, whales, and more factors for the decline in prices.
At the moment of writing this article, Bitcoin is trading in the green, and the most important coin is priced at $8,779.08.
Mike Novogratz said that BTC cannot be considered a hedge against global calamity
Mike Novogratz, chief executive of Galaxy Digital, said that the popular saying that Bitcoin is a hedge against economic turmoil is nothing but a myth.
Last week, coronavirus fears wiped out $6 trillion from the global markets and BTC barely surged. But on the other hand, it fell from above $10k to $8,410.
Investors are not afraid of pulling out of risky investments
Novogratz said that the recent sell-off of both Bitcoin and the equities markets shows that investors are not afraid to pull out of risky investments such as crypto when fear gets a hold of the economy.
According to the online publication the Daily Hodl, such a strategy subjects Bitcoin to external factors such as stock market price movement, global economic conditions, and geopolitical risks.
Novogratz said the following:
“How did BTC go from being a hedge against bad stuff to getting washed out and trading like a risk asset? When things go from bad, to very very bad like they did last week, investors take leverage down as fast as they can. They book profits to make up for other losses. Ouch.”
Someone responded to Novogratz on Twitter:
“Same reason gold got dumped hard. People will sell anything to get liquidity in market moves like that. It doesn’t mean gold (or btc) is no longer a hedge. It will just take time for the system to adjust to shocks.”
Still, there are a lot of optimistic crypto-related predictions popping up these days.
CoinMarketCap is a website that provides cryptocurrency market cap rankings, charts, and more. It was purchased by Binance for $400M in 2020.
Eduard Watson Author
An experienced finance writer for more than 10 years, active industry watcher, and gadget enthusiast.