In the last 24 hours, the Bitcoin price has risen by $400 from a low of $8,950 to $9,377 at the time of writing. And that’s not counting the $1,100 rise in the last 5 days alone. BTC is rallying again in 2020, and the bulls couldn’t be happier. But what might be the reason for this rise, though?
Unless you’ve been living under a rock for the last 2 months, you may have heard about the Wuhan coronavirus – a virus first identified in Wuhan, Hubei province in China. Approximately 6,000 cases have been confirmed all around the world, including 5 in the United States (all of which had recently visited Wuhan).
China’s response to the outbreak has been urgent, with Wuhan and 15 cities in the Hubei province being placed on lockdown with public transport and outbound travel shut down completely.
Not to be facetious about the whole situation, but the financial markets have responded negatively. The NYSE fell for the 4th day in a row. Oil prices took a dip and so did DOW. Meanwhile, the historical hedge against calamity, Gold, has seen a rise.
Gold has always been a hedge against economic uncertainty in the world. Whenever traditional markets have slowed down, people have turned to uncorrelated assets like Gold to protect themselves from the slowdown.
However, as we’ve seen in the last few years, Bitcoin is slowly becoming the new Gold. We’ve seen people in economically unstable countries like Venezuela and Brazil turning to the cryptocurrency to protect their money. Bitcoin, as an asset, has also outperformed Gold in 2019 and looks set to do the same in 2020.
The crisis in China may affect its economy as well, with a population of around 40 million being placed under lockdown. In this scenario, we could see investors relying on BTC more and more to hedge against the same.
We’re probably seeing that with a $1,100 rise in the Bitcoin price in the last 5 days. That number could go higher in the coming days and months. The world’s biggest cryptocurrency is truly coming into its own as the hedge-elect of the 21st century. Gold, you’d better watch out.