Mike Novogratz, CEO of Galaxy Digital, has tried to clarify what exactly happened to the safe-haven status of Bitcoin. As per his recent tweet, he cited that investors chose to bring down leverage during such unpredictable events and that could have potentially led to the decline in prices of Bitcoin.
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.
— Michael Novogratz (@novogratz) March 1, 2020
Bitcoin Fails To Be Considered As A Store Of Value
This week would definitely go down in history as the U.S. stock market suffered from its most significant correction due to the great depression which also led to the downfall in oil prices of about 16 percent.
When a ruthless sell-off gripped the global markets, Bitcoin failed to be considered as a store of value, which several believed should be its underlying use case. In reality, Bitcoin showed the worst performance than any other traditional asset, dropping 15 per cent of its price within a week. At the press time, Bitcoin was trading just beneath its significant support level of $8,500.
Bonds Became A Safe Haven After The 2008 Crisis
While gold bugs rapidly dismissed Bitcoin as a hedge against uncertainty in the economy, the claim of Novogtatz about investors maintaining gain seemed to be valid.
A great surprise which came during this turbulent week was that the price of gold recorded a drop of 5 percent as well which really started the debate it was supposed to be the most reliable store of value.
Much similar to the crisis which occurred during 2008, investors began liquidating both gold and stocks for satisfying their calls of margin. Cash and bonds proved themselves to be the true safe-haven during those troubled times.