Bitcoin Starts Quarter With Price Down Just 10% YTD vs U.S. Stock’s Worst Quarter Since 2008
Bitcoin (BTC) has in total suffered just 10% from the coronavirus outbreak which obliterated stocks and caused the United States to print $6 trillion. Bitcoin Starts Quarter With Price Down Just 10% YTD vs U.S. Stock’s Worst Quarter Since 2008
That was according to the latest quarterly price data from monitoring resource Skew.com on March 31, which showed that for Q1 2020, BTC/USD is only down by around 10.7%.
Bitcoin streets ahead of macro assets in 2020
At press time, the pair remained higher after seeking new support at $6,500 on Monday.
At those levels, the pair is just $700 lower than its position at the start of 2020, and $3,800 beneath its current year-to-date all-time high of around $10,300.
Bitcoin has advanced 75% in the two weeks since hitting its quarterly low — in a volatile period, that recovery at one point reached 90% as markets peaked at over $7,000 on some exchanges.
As such, Bitcoin now looks increasingly resilient as an investment option versus traditional markets, which are still trailing much more as a result of coronavirus.
That was despite intervention by central banks on a scale never before seen in history — as Cointelegraph noted, the U.S. money printing exercise alone recreated the country’s entire GDP of 1990 and added it to the dollar supply.
Indicator flashes green as lucrative Q2 looms
Statistically, Q2 in a given year tends to be the most profitable for Bitcoin holders. Since 2013, just one Q2 has delivered negative returns, Skew reveals, with average gains totaling 65%.
Signs of potential are becoming visible on some indicators. As Bloomberg reported on Tuesday, the GTI Vera Convergence Divergence Indicator is giving the Bloomberg Galaxy Crypto Index its first “buy” signal in three months.
The mood among analysts is also turning more optimistic. In his latest forecast on Monday, veteran trader Tone Vays said that he no longer expected BTC/USD to find new lows of less than $3,700.
Earlier in March, he had warned that Bitcoin could plunge to as low as $2,800. Even if this were still to happen, he added, it would not pose a threat as long it was before May’s block reward halving event.
Stocks On Track For Worst Quarter Since 2008
U.S. stocks are headed toward their worst quarter since the financial crisis, a stunning blow for the market that few investors could have anticipated at the start of the year.
Markets were wobbly on the final day of the quarter. The Dow Jones Industrial Average fell 192 points, or 0.9%, to 22134, while the S&P 500 slipped 0.9% and the Nasdaq Composite lost 0.3%.
The relatively muted moves Tuesday stood in contrast to the volatility over most of the past few months, which even veteran traders on Wall Street have described as being one of the most turbulent periods they could remember.
Just months ago, money managers were optimistic that the global economy would stage a modest rebound. The U.S. and China had appeared to make progress on a trade agreement, and central banks around the world looked poised to keep interest rates steady for the foreseeable future.
The subsequent selling was indiscriminate. Investors scrambled to flee assets ranging from stocks to commodities to emerging market debt, betting the global economy was headed for a sharp downturn. The longest-ever bull market in U.S. history ended abruptly, with declines so sharp that rarely-used mechanisms to halt trading across the entire market were activated by exchanges on multiple occasions.
The S&P 500 was down 19% for the quarter through Monday, heading for its biggest quarterly decline since 2008. The Dow industrials have fallen 22% through Monday, on track for their worst decline since 1987.
Money managers and strategists are reluctant to call when the worst of the selling might pass.
“We’re really in unprecedented territory,” said Shawn Snyder, head of investment strategy at Citi Personal Wealth Management.
Analysts say the erosion of value in financial markets in recent weeks was exacerbated by factors including hedge funds’ increased use of computer-driven trading models, investors urgently unwinding risky bets made with borrowed funds and big asset managers’ push to divest even the safest assets and hold more cash.
Central banks led by the Federal Reserve have been forced into emergency interventions to boost funding in credit markets and ensure an adequate supply of U.S. dollars to calm the worst of the anxiety.
Some of those measures have helped reassure investors. But equity markets may see a return of volatility when businesses start reporting quarterly performance and earnings in a few weeks, said Salman Baig, a portfolio manager at Swiss investment firm Unigestion. Economic activity in many countries has ground to a halt as governments have placed restrictions on air travel and work to limit the contagion.
“The figures for the macroeconomic picture show very significant contractions. It’s not going to be permanent, but it will be severe,” Mr. Baig said.
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