Cryptocurrencies have recorded their biggest decline since the beginning of the pandemic this week.
Bloomberg’s index, which calculates the largest US cryptocurrencies, lost 25 percent.
Such a huge drop was last experienced in the week of March 13, 2020, with a rate of 40 percent.
The decline in cryptocurrencies accelerated after China banned financial and payment service providers from making cryptocurrency transactions.
Bitcoin fell to a three-month low on Wednesday to $ 30,000, down nearly 30 percent.
Bitcoin and cryptocurrencies lost value after Tesla CEO Elon Musk announced last week that Tesla car sales will no longer be made with cryptocurrencies.
The support of the institutions behind Bitcoin played a big role in the rise of cryptocurrencies.
For this reason, the announcement that some states will regulate cryptocurrencies and that some institutions will withdraw their support causes cryptocurrencies to lose value.
The depreciation of cryptocurrencies may also be the result of a general trend showing that investors are moving away from speculative business investments.
Technology that performed well during the coronavirus epidemic and rapidly growing company stocks have also been in trouble in recent weeks.
On the other hand, gold, which has been a safe haven for investors for many years, has been on the rise again in recent weeks.
Is it scary for Bitcoin to hit the Record Level?
Bitcoin’s value has decreased by $ 20,000 in the last 10 days.
Bitcoin, which rose to $ 59,000 in May, lost more than 30 percent in value with the decline; For the last three days, it has been following a fluctuating course at the limit of 40 thousand dollars.
The 14-day relative strength index indicator used to understand whether any asset is overbought or oversold indicates that bitcoin is currently oversold.
Institutional investor turned to gold
According to the news of Bloomberg, the latest developments reduce the validity of the view that bitcoin is a competing investment tool.
While some still think bitcoin is an important digital currency as a storage medium, the fluctuation may not be like that.
According to CNBC’s report, JPMorgan’s latest report reveals that according to futures contracts, investors are moving away from Bitcoin and starting to invest in gold again.
The institution stated in its report published on Tuesday that institutional investors abandoned cryptocurrencies and turned to gold.
However, JPMorgan also pointed out that the mood with Bitcoin in the long run is positive.
Is Bitcoin still an emerging investment tool?
Speaking to Bloomberg, Edward Moya, senior market analyst at forex trading research firm Oanda, stressed that it is now easier to say that cryptocurrency is a good investment tool, as Bitcoin is the best performing asset in 2020 and April.
However, according to Moya, the depreciation experienced this week should be an alarm signal, and cryptocurrencies should be seen as a risky tool rather than a tool to take action against inflation.
Much more than Bitcoin’s bullish and bearish trend over the past 60 days.
Gold, on the other hand, continues to gain value for three weeks. The depreciation of the dollar and the unbalanced US bond yield also played a role in this.
Brian Lan, director of a Singapore-based investment company, thinks that the depreciation of cryptocurrencies also plays a role in the appreciation of gold.
David Lightfoot, CEO of the investment company called xbullion, which gives the opportunity to physically invest in gold, emphasizes that bitcoin is still a developing investment vehicle.
Stating that the Bitcoin supply is limited like gold, Lightfoot states that a similar fluctuation occurred on the oil front after the first discovery.
“An investor investing in cryptocurrencies has to struggle with volatility. It’s all about the size of the investment. Opportunities are still there because the digital asset space is growing,” London-based Blu Family Office company Christian Armbruester told Bloomberg.