The stock market is currently in a cataclysmic state. Following a disastrous fall in the price of oil by roughly 30%, stock exchanges around the globe are now solidly in the red. Interestingly, Bitcoin and the crypto market is also falling in this wider stock market fall.
Bitcoin is trading close to $7,500
Specifically, Bitcoin is trading at $7,685 at the time of writing. The following market performance visualization, from COIN360, shows that the entire cryptocurrency market is falling. This is somewhat odd, seeing as the cryptocurrency market is often immune to traditional market volatility.
Bitcoin, in particular, is sometimes known as “digital gold” due to its stability. However, Bitcoin is now part of the same market fall as traditional stocks and indexes. Bitcoin’s 2020 gains are now virtually gone, after days of substantial market losses.
One should note that the stock market is facing just as bloody, if not worse, price crashes as Bitcoin. Just last week, the stock market lost $3.2 trillion in just five days. Following this, the cryptocurrency investor Tom Lee said that stocks are now “starting to look like crypto”.
Stock market crashes due to 30% oil price correction, coronavirus concerns
The stock markets volatility is continuing this week, as today saw a flash stock market crash. This came after a 30% correction in the price of Brent crude oil, as well as growing coronavirus concerns.
These oil concerns stem from unrest in the OPEC oil cartel, as Saudi Arabia and Russia debate cuts to crude oil production as global demand falls. Recent reports suggest that Saudi Arabia is looking to increase production despite falling demand, which could spark a price war.
Additionally, the stock market was already in decline due to growing fears over the COVID-19 coronavirus’ spread. Italy recently went public with far-reaching quarantine measures in the country’s northern region.
Why is Bitcoin and crypto crashing?
To see this sort of uncertainty hit stock markets hard is not particularly surprising. However, the fact that it is also affecting the cryptocurrency market this severely is somewhat surprising.
Some observers suggest that market-wide panic is simply gripping investors. What’s more, the fact that many investors are now regularly investing in Bitcoin and other cryptocurrencies could be another reason.
As such, these institutional investors could simply regard Bitcoin as “another investment”, rather than “digital gold”. Nevertheless, it will be interesting to keep an eye on the crypto markets in the coming hours and days.
Rasmus Pihl is a writer for Toshi Times by day and an avid follower of the cryptocurrency industry by night. Rasmus holds a Bachelor’s Degree in Marketing from the Gothenburg School of Business, Economics, and Law and runs a Swedish marketing consulting firm. Moreover, when he isn’t writing for Toshi Times, traveling, working or changing the world in some other capacity, Rasmus is more than likely caught up in postgraduate studies.