Since the coronavirus started spreading rapidly around the world, the traditional markets crumbled with Bitcoin following them speedily. Over the weekend, Bitcoin failed to sustain gains once more, while commentators warned that the Federal Reserve’s interest rate cuts were ‘not a drill.’
After the US’s central bank cut rates to almost zero on March 15, BTC/USD briefly surged, although, on March 16, it fell in line with another panic trading session on the traditional markets.
Bitcoin and stock markets shed nearly 10%
24-hour highs of around $5,900 later gave way to the current levels of approximately $4,500. Stocks widely plunged at the opening bell in Europe, Asia, and London, with 7% losses commonplace as the coronavirus pandemic concerns escalated. The United Kingdom’s FTSE 100 dropped below 5,000 points for the first time since 2011. Companies like airline EasyJet lost 30% of their share value.
In the case of the Bitcoin commentators, it was the lack of viable reaction to the Fed, which caused additional caution. Despite this unprecedented move, markets seemed less optimistic about the rate cuts and the injection of vast amounts of cash into the economy.
Morgan Creek Digital co-founder Anthony Pompliano published on Twitter:
“The last time the Fed did an emergency rate cut was during the 2008 financial crisis. Over the last two weeks, they did two separate emergency rate cuts that totaled 1.5% and brought us to 0% interest rates. This is not a drill. These are unprecedented actions by the Fed.”
No bailouts, no circuit breakers
In the past, the US Treasury Secretary Steven Mnuchin said that there is ‘almost unlimited’ liquidity readily accessible to the US banks and businesses. Money printing of such magnitudes is exciting to the individuals and entities heavily invested in the fixed-supply hard money, including Bitcoin.
According to the previous reports, Bitcoin’s lack of manipulation by central banks and governments enables it to ‘monitor itself’ in times of crisis. After it hit 18-month lows last week, Bitcoin regained composure, increasing its volatility while simultaneously avoiding recent more massive losses with no external intervention.
According to various sources that published on March 16, 2020, the occurrence is in massive contrast to the stock markets that shut down automatically whenever losses occur too quickly. PlanB, the creator of the stock-to-flow (S2F) Bitcoin price model, said on March 15:
“…The difference with #btc is that the drop clears all that leverage/debt, all leveraged longs are liquidated, gone. No circuit breakers, no bailouts that is great, the system clears itself. Very different from stocks and bonds markets.”
PlanB commented before the current stocks tumble.