The collapse of Bitcoin a week ago was followed by the breakdown of gold in the markets. The precious metal experienced sharp fluctuations this week, in which its price reached a maximum of seven years of $ 1,688.66 on Monday. It also closed with its most significant weekly decline since November.
The unfortunate advance of the Coronavirus continues. The collapse in gold prices is raising more questions about what is happening in the markets.
The Bitcoin Collapse
Market analysts fail to make accurate forecasts. Financial markets are complex systems, with many variables involved at the same time. Therefore, it is easy to reach the wrong conclusions from the available data. That is what happened with Bitcoin a few days ago. Despite what most market experts believed, the bullish rally that boosted the price of BTC for weeks to settle at around $ 10,000, stopped.
It coincided with the collapse of world markets due to the expansion of the Coronavirus. Crypto community believes that the unfortunate advance of the disease is one of the factors that was driving the price of Bitcoin.
In the face of the expansion of the disease that has threatened world markets, they assumed that investors would be positioning their capital in assets worth reserves. These assets are gold, silver, and Bitcoin. While silver and gold experienced an increase in prices, the BTC collapsed, dragging the crypto market with it.
Analysts can’t explain why gold shows such strange behavior
The bitcoin downfall led many members of the crypto community to rethink whether Bitcoin constitutes an active store of value. The cryptocurrency also collapsed amid a global crisis affecting financial markets. It seemed clear that Bitcoin didn’t work as a store of value.
However, when the Coronavirus continues to expand globally, another safe-haven asset, gold collapsed. Its price reduced by 7.3%, close to the fall of 9% suffered by Bitcoin before the Coronavirus.
This would be a rather strange drop for the precious metal. Analysts conclude that during the current market conditions lead even such valuable reserve asset as Bitcoin and gold, suffer during the crisis.
Peter Schiff, the most noticeable cryptocurrency critic in the world, and gold mogul commented that the falls in gold are quite rare, while those of Bitcoin occur quite often. Nevertheless, this comment doesn’t explain why the gold market has had such strange behavior.