Cryptocurrency prices skyrocketed on Tuesday while the equity markets continue to come under pressure due to coronavirus fears weighing on investors. The value of the crypto market cap increased by $14 billion overnight, as Bitcoin rose by 10% in one day
Bitcoin jumped by more than 10% from 24 hours previously. It was trading at $6,569.17 this morning. Ethereum also gained almost 7%, while Ripple’s XRP soared by more than 5%.
The market capitalization reached $182.62 billion after adding $14 billion. Before increasing, the cryptocurrencies suffered significant losses earlier this month.
At first, the whole market sold off following a plunge in oil prices on Mar. 8. After that, cryptocurrencies saw $93.5 billion wiped off their value overnight, as well as a 48% downfall in the price of Bitcoin.
Cryptocurrencies endured massive sell-offs along with the equities. Several experts named Bitcoin “digital gold,” comparing it to safe-haven currencies. Some went so far that they declared Bitcoin as a risk-off asset to invest in when markets are under pressure. However, Bitcoin is behaving more like a risk asset, than a safe-haven so far.
While the stocks in the U.S. and Europe closed lower again on Monday, cryptocurrencies bucked the trend. However, the U.S. Federal Reserve announced an open-ended asset purchase program on Monday to support markets as the number of coronavirus cases continues to rise globally. After that, stocks climbed up in Tuesday morning trade in Asia.
What do the analysts say?
Vijay Ayyar, the head of business development at cryptocurrency exchange Luno, noted that investors see some bullish Bitcoin price action today along with other asset classes. Such 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.
Analysts also stated that it would 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.
