The cryptocurrency market rallied on Tuesday. Bitcoin skyrocketed by 10% in one day. It was trading at $6,569.17 on Tuesday morning. Ethereum also hit high by adding almost 7%, while Ripple’s XRP increased by more than 5%.
The value of the crypto market cap increased by $14 billion overnight, as Bitcoin rallied. Meanwhile, the equity markets continue to come under pressure due to coronavirus fears weighing on investors. While stocks in the U.S. and Europe closed lower again on Monday, cryptocurrencies bucked the trend.
The U.S. Federal Reserve announced an open-ended asset purchase program on Monday to support markets due to the globally rising coronavirus cases. After that, stocks also climbed up in Tuesday morning trade in Asia.
The cryptocurrencies suffered significant losses earlier this month due to the worldwide crisis. The whole market sold off following a plunge in oil prices on Mar. 8. Then cryptocurrencies saw $93.5 billion wiped off their value overnight, adding a 48% downfall in the price of Bitcoin. However, the crypto market capitalization reached $182.62 billion after adding $14 billion yesterday.
Will Bitcoin become the safe haven after all?
Analysts speculated whether Bitcoin was a safe-haven asset or not. Some of them thought that amidst the coronavirus pandemic Bitcoin would attract investors as a risk-off asset. They dubbed Bitcoin as “digital gold,” saying that traders could invest in them when markets were under pressure. But Bitcoin has been behaving more like a risk asset, than a safe haven so far.
Investors see some bullish Bitcoin price action today along with other asset classes – stated Vijay Ayyar, the head of business development at cryptocurrency exchange Luno. According to him, such a rally was due to the Fed’s announcement yesterday about unprecedented measures to shore up the economy.
Ayyar thinks that those measures have given a lot of confidence to investors. He also noted that it will be interesting to see how Bitcoin fares in such an environment. This is its first test as a safe-haven asset in a market downturn and is yet to be proven.