Bitcoin crashes to $4,500 as cryptocurrency markets collapse
The Bitcoin and wider cryptocurrency markets are experiencing some volatility right now.
As we fire up the charts today, we can see that WHAT THE HELL HAPPENED?
BTCUSD chart by TradingView
The above chart shows Bitcoin (the candles that are going down in flames), compared to gold (gold line). We also threw in Bitcoin's 200-day moving average (purple line) to help fill the empty space and give the chart a more favourable aesthetic balance.
The hell happened
Bitcoin is down about 40% at the time of writing, and down more than 15% in the last hour at the time of writing. Shortly before the drop, all cryptocurrency price trackers simultaneously reported the Bitcoin price as $666, and several traders reported that their monitors started leaking blood.
Some traders rubbed their eyes in disbelief, contracting coronavirus in the process and there have been isolated reports of Bitcoin maximalists' eyes glowing red as they repeatedly chant "nunc autem in inferno etiam Lamborghinis".
Technical analysis is no good here, because we are just so far beyond that mortal realm now, but that's obviously not going to stop analysts from taking a jolly good stab at it in the immediate future.
For this kind of major move, we need to consult the experts. One of those experts, Thrillhouse Multicapital senior analyst Milhouse Vanhouten, saw the whole thing.
"First it started falling over," Vanhouten explains. "Then it fell over."
Opinion: Risk-on, risk-off
This move continues highlighting the fact that Bitcoin is currently in "risk asset" mode. As markets fall, people will continue disposing of the high risk assets.
This suggests that it will need to go through a transition period of sorts before it can start acting as the safe haven it's theoretically meant to be. We've clearly seen that falling equities aren't enough to trigger this transition phase, which suggests any Bitcoin perma-bulls will have to start looking for new signs that say people are actually losing confidence in fiat. There would have to be plenty more signs before this actually happens though.
Someone who subscribes to this theory might write themselves a rule of thumb like "no touching Bitcoin (or your face) until house prices start falling".
It's also interesting to note that the last few days of plunges have also seen gold backslide a few percentage points, which suggests it's going through a similar process. The markets might still be shaking off Bitcoin's and gold's remaining risk status.
This is pretty much on par with how we can reasonably theorise Bitcoin will perform in a recession, now that we've got concrete proof that it's being treated as a speculative, high-risk asset rather than a safe haven.
The inhuman speed and ferocity of the drop are likely due to a combination of the fact that Satan himself just got liquidated, and that cryptocurrency exchanges trade 24/7 and don't have the circuit breakers that restrain drops in traditional markets.
Disclosure: The author holds BNB, BTC at the time of writing.