Bitcoin is the new asset of the 21st century. According to the Wall Street Journal, nearly “90% of 70 financial asset classes posted positive total returns this year through April”. Bitcoin gained over 50%, becoming the best performing asset for the first quarter of 2019.
Bitcoin in 2018 and The Bear Market
End of 2018 warned of a bear market, a recession, or another market crash. The Wall Street Journal report showed that almost 90% of all assets dropped across the board. The S&P 500 fell 6.2%, the Dow was down 5.6% and the Nasdaq Composite posted a negative 3.9%, the biggest yearly decline for all three in a decade. The Federal Reserve, slow global growth, US government shutdown, all contributed to the stock market plummeting to the worst quarterly decline since 2008. Bitcoin lost approximately 75%.
“Wall Street concluded a tumultuous 2018 on Monday as the major stock indexes posted their worst yearly performances since the financial crisis. After solid gains on Monday, the S&P 500 and Dow Jones Industrial Average were down 6.2 percent and 5.6 percent, respectively, for 2018”. – CNBC December 31st 2018
Bitcoin Lead Bounce During First Quarter
In a Q1 2019 WSJ report, 90 percent of the 70 asset classes tracked by Deutsche Bank AG bounced back. The U.S. stock market rallied close to six-month highs and the price of Bitcoin surged over $5,000 USD on April 2nd.
Cryptocurrencies have been among the biggest winners of all, with bitcoin rallying more than 50% and recently reclaiming $5,000 after last year’s bust. –Wall Street Journal – May 6, 2019
Market Worries Over US-China Trade War
Late Sunday however, the winning streak ended sharply as Donald Trump threatened China of higher trade tariffs . The following morning the financial markets panicked, plummeting the Dow as low as 450 points. Oil dropped to $60 a barrel. Price of Bitcoin dropped approximately 2%, but soon recovered as it reached new highs of over $6,000 in six months.
Dow plunges again
Dow has worst day since January 3 2019 (CNBC)
Investors remained skeptical as the Dow plunged again, trading down around 640 point lows on Tuesday. Many analysts now believe the the majority of the asset classes are too sensitive to the stock market. Remarkably, despite the $40 million hack on Binance exchange, Bitcoin moved higher crossing $6100.
Bitcoin is the new Gold.
Assets that have low correlation with other assets reduce the amount of risk in a portfolio. 90% of all asset classes seem to move along the same pattern as the stock market. Bitcoin, however, looked to be the hedge, once dominated by gold. While a wildly volatile stock market posted the worst week of the year, Bitcoin spiked to a 30-day high of $6434 from $4955, a 30% gain.
“With increasing adoption, new wallet addresses and transactions, the fundamentals are all in line to break new highs in the coming months. #DropGold campaign by Grayscale Investments is a valid argument. We live in a digital world and Bitcoin is a digital store of value that has a low correlation with other assets”. – Andrew Lim (SKBC Co. Ltd.).